Income Gap: Like Newton's First Law of Motion

About two weeks ago, the Census Bureau released their Income, Poverty, and Health Insurance Coverage in the United States: 2009 report. The cliff notes:

The poor are getting poorer quicker, and in greater numbers, than ever.

Earlier today, Hope Yen at the Associated Press ran a story noting that income inequality reached a record gap; 14.5 to 1 vs. vs. 1968’s low of 7.7 to 1. (Translation: for every slice of pie a poor person has, someone making over $100,000 has 14.5 slices). Her piece also cited a measure, called the Gini index that shows US income inequality at its widest level since the index began in 1967. The conclusion was examined in a subsequent piece by Timothy Noah who has written an excellent 10-part series on income inequality for Slate, pointing out that one of the measures used was based on adjusted figures, which show the gap getting wider more quickly. 

The sad fact is these figures are growing period. The sadder fact is that though this is nothing new, now, it is taking place in a country that has proven it can create trillions of dollars in a Washington minute, when the banking system needs help, but can't figure out how to create a more equitable economy.

The US poverty rate for 2009 is 14.3 percent, (POB – or post-bailout) up from 13.2 percent in 2008 (PB – pre-bailout). 43 million people lived in poverty in 2009 vs. 39.8 million in 2008. The number of people living in poverty is at a record high. The increase in poverty rates was the highest for Hispanics. The increase for families headed by single-women was higher than for married couples.

In terms of income, things weren’t that different in 2009 vs. 2008. In terms of health insurance, the percent of uninsured and number of people without insurance rose more quickly than ever. The percent rose to a record 16.7% or more than 50 million Americans in 2009 vs. 15.4% or 46 million in 2008. 

Take away all the stats and fancy index names and we’re left with a phenomenon that follows Newton’s First Law of Motion (yeah, that’s fancy too, sorry). A body in motion will remain in motion unless acted upon by an external force. The wealthy will remain holding a greater proportion of the nation's net worth, absent anything to get in their way, while the poor and middle class will continue to get less of the pie.