Opinion Columns & Blogs

Editorial: As the poor and middle class get left behind, America’s income gap widens

For the vast majority of families in Sacramento, throughout the Valley and across America, it’s not “trickle down,” but rather an even steeper climb up.

By now, it should be clear it is a cruel hoax to say that if the rich get even richer, that inevitably helps everyone else. In fact, trickle-down economics has not created faster growth or broader prosperity, but a level of income inequality that is among the developed world’s worst and that threatens the American dream.

So it is not class warfare to point out that the Sacramento region’s income gap has widened during the Great Recession and its aftermath.

As The Bee’s Phillip Reese clearly showed Sunday, the poorest people among us were hit hardest. Sacramento-area households making $23,089 or less a year – the bottom 20 percent – had their inflation-adjusted incomes drop nearly 10 percent during the downturn and another 17 percent from 2009, when it ended, to 2012, as the region’s economy slowly rebounded.

Most other households also lost ground, according to the census figures Reese analyzed. Families earning between $23,090 and $43,856 a year had their real income decline 10 percent during the recession and another 11 percent during the recovery. Those in the next tier, making between $43,857 and $71,106 a year, lost 7 percent during the downturn and another 8 percent since.

As usual, the top 5 percent enjoyed a cushier landing. Local households earning $193,360 or more annually had their incomes rise slightly from 2009 to 2012, the only group so fortunate. In 2013, they were also prime beneficiaries of the bullish stock market, which recorded its biggest overall gain since 1995.

The families in the bottom 20 percent don’t have retirement accounts that were replenished by rising stock prices, much less investment portfolios. They are truly poor, as a new study out last month proves. To afford merely a modest standard of living in our state, it takes a family of four with one working parent an average of $60,771 a year (or $29 an hour), according to the California Budget Project. In Sacramento County, that figure is $56,707, which according to the census, would put that family squarely in the middle class.

The fact that all but the richest Americans are falling further behind should sound alarm bells. Since consumer spending is the primary driver of the economy, if the vast majority of families don’t have money to spend, that could stall or even reverse the recovery.

That’s one reason why it is so unconscionable that Republicans in Congress are so stingy about extending unemployment benefits, funding food stamps and investing in education and jobs programs – all of which would immediately boost local economies and give more Americans a fighting chance to climb the ladder of success.

It’s also why it is so essential that President Barack Obama keeps making the case about helping the middle class. In a significant Dec. 3 speech, he warned that growing inequality and declining opportunity “pose a fundamental threat to the American dream, our way of life and what we stand for around the globe.”

Politically, it is a smart play. More important, it is good for the country. There’s little else that Obama could accomplish in the rest of his presidency that would be as meaningful as making sure that the rising economic tide does, in fact, lift all boats.