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The Honolulu Advertiser
Posted on: Friday, January 27, 2006

Wealth gap widening in U.S., Hawai'i

By Mark Johnson
Associated Press

ALBANY, N.Y. — The disparity between rich and poor is growing in America as the federal minimum wage has remained flat for years, union membership has declined and industries have faced global competition, according to a study released yesterday.

The report by the Center on Budget and Policy Priorities and the Economic Policy Institute, both liberal-leaning think tanks, found the incomes of the poorest 20 percent of households nationally grew by an average of $2,660, or 19 percent, over the past 20 years.

Meanwhile, the incomes of the richest fifth of families grew by $45,100, or nearly 59 percent, the study by the Washington-based groups said.

Households in the middle fifth saw their incomes rise 28 percent, or $10,218.

The figures, based on U.S. Census data, compare the average growth in 1980-82 to that of 2001-03, after adjusting for inflation.

The poorest one-fifth of households, the report said, had an average income of $16,780 from 2000 to 2003, and the top fifth of had an average income of $122,150 — more than seven times as much. Middle-income households' average income was $46,875.

Trudi Renwick, an economist with the union-backed Fiscal Policy Institute in New York, said globalization, the decline of manufacturing jobs, the expansion of low-wage service jobs, immigration and the weakening of unions have hurt those on the lower end of the economic scale.

In 38 states, the incomes of high-income households grew by a higher percentage than those of the lowest-income households; Alaska was the only state in which the reverse was true.

The 11 states where the high and low incomes increased at about the same rate were mostly in the west and Midwest.

The greatest disparity between rich and poor was in New York, where the top 20 percent of wage earners had average incomes 8.1 times larger than the poorest 20 percent in the early 2000s. Texas had only a slightly smaller gap; Wyoming had the smallest disparity, at 5.2 to 1.

In Hawai'i, according to the report, the incomes of the richest families climbed substantially, while the incomes of middle- and lower-income families saw only modest increases:

  • In the early 2000s, the richest 20 percent of Hawai'i households had average incomes 6.9 times those of the poorest 20 percent. That is up from 4.8 in the early 1980s. The increase in income inequality was the 8th largest in the nation.

  • In the early 2000s, the richest 20 percent of Hawai'i households had average incomes 2.5 times as large as the middle 20 percent of households — up from a ratio of 1.8 in the early 1980s. The increase in income inequality was the fifth-largest in the nation.

  • In the early 2000s, the income gap between the richest 20 percent of Hawai'i households and the poorest 20 percent was the 22nd largest in the nation. The income gap between the richest 20 percent and the middle 20 percent was the 27th largest in the nation.

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