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America's income gap is widest on record

WASHINGTON — The income gap between the richest and poorest Americans grew last year to its widest amount on record as young adults and children in particular struggled to stay afloat in the recession.

The top-earning 20 percent of Americans — those making more than $100,000 each year — received 49.4 percent of all income generated in the United States, compared with the 3.4 percent earned by those below the poverty line, according to newly released census figures. That 14.5-1 ration was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

At the top, the wealthiest 5 percent of Americans, who earn more than $180,000, added slightly to their annual incomes last year, census data show. Families at the $50,000 median level slipped lower.

"Income inequality is rising, and if we took into account tax data, it would be even more," said Timothy Smeeding, a professor at the University of Wisconsin in Madison who specializes in poverty. "More than other countries, we have a very unequal income distribution where compensation goes to the top in a winner-takes-all economy."

Lower-skilled adults ages 18 to 34 had the largest jumps in poverty last year as employers kept or hired older workers for the dwindling jobs available, Smeeding said.

Rea Hederman Jr., a senior policy analyst at the Heritage Foundation, a conservative think tank, agreed that census data show families of all income levels had tepid earnings in 2009, with poorer Americans taking a larger hit. "It's certainly going to take a while for people to recover," he said.

The census figures come amid heated political debate in the runup to the Nov. 2 elections over whether Congress should extend expiring Bush-era tax cuts. President Barack Obama wants to extend the tax cuts for individuals making less than $200,000 and joint filers making less than $250,000; Republicans are pushing for tax cuts for everyone, including wealthy Americans.

Another result of the income troubles reflected in the census data is a decline in the number of marriages. In the United States, marriages fell to a record low in 2009, with just 52 percent of adults 18 or older saying they were married, compared with 57 percent in 2000. The never-married included 46.3 percent of young adults 25-34.

Among other 2009 findings:

• The poorest poor are at record highs. The share of Americans below half the poverty line — $10,977 for a family of four — rose from 5.7 percent in 2008 to 6.3 percent. It was the highest level since the government began tracking that group in 1975.

• The poverty gap between young and old has doubled since 2000, due partly to the strength of Social Security in helping buoy Americans 65 or older. Child poverty is now 21 percent, compared with 9 percent for older Americans. In 2000, when child poverty was at 16 percent, elderly poverty stood at 10 percent.

The 2009 poverty level was set at $21,954 for a family of four, based on an official government calculation that includes only cash income. It excludes noncash aid such as food stamps.

Arloc Sherman, a senior researcher at the left-leaning Center on Budget and Policy Priorities, noted the effects of expanded government programs in cushioning the impact of skyrocketing unemployment. For example, the Census Bureau estimates that 3.6 million people would have been lifted above the poverty line if food stamps were counted — a number that would have reduced the 2009 poverty rate from the official 14.3 percent to 13.2 percent.

America's income gap is widest on record 09/28/10 [Last modified: Tuesday, September 28, 2010 9:45pm]
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