In a speech in Washington this week, President Obama said that income inequality is the “defining challenge of our time.” Speaking at the Arts and Recreation Center in the low-income southeast Washington neighborhood of Anacostia, the president underscored an issue that has repeatedly ranked at the top of concerns Americans have about the future and their own upward mobility. Indeed, Latinos have said in poll after poll that the economy is their top priority as well and agree, as the president pointed out, that the “basic bargain at the heart of the economy has frayed.” President Obama said that his last three years in office would be dedicated to addressing the ever-widening income gap.
Watch the president’s whole speech below followed by a look at income inequality by the numbers:
A look at some of the statistics related to income inequality, some of which the president outlined, are revealing and provide some insight into the challenge that lay ahead.
Raising the Federal Minimum Wage Would Lift Latino Workers and the Economy
- Twenty five percent of the 30 million who would see a raise from the Fair Minimum Wage Act are Latino.
- Raising the minimum wage would disproportionately benefit Latinos because of their overrepresentation in low-wage occupations.
- Raising the tipped minimum wage would significantly raise the wage standard in Latino- and women-dominant occupations that form the backbone of restaurant work and other high-growth service sectors.
- The failure of wages to cover basic needs is one of the major factors contributing to rising Latino child poverty and income inequality.
- Millionaires are making more money but paying less taxes. In the past 50 years, the 400 richest families in America actually had their tax rates fall by 60 percent.
- Since 1961, the effective federal income tax rate for the richest 400 families in America saw their taxes fall from 42 percent to 18 percent—a decrease of 60 percent. [David Cay Johnston, Tax Notes, Is Our Tax System Helping Us Create Wealth? 12/21/09]
Asset building for the low and middle class:
- The top 1 percent of Americans own 40 percent of our country’s wealth, while the bottom 80 percent owns less than 5 percent.
- In 2010, the richest 1 percent of households owned 42.1 of the nation’s financial wealth. The bottom 80 percent owned only 4.7 percent of the nation’s financial wealth. [Wealth, Income, and Power, 2/2013]
Income inequality gap:
- Over the past several decades, America’s middle class has lost tremendous ground. Between 1979 and 2007, the richest top 1 percent of American households saw their income nearly triple. On average, the wealthy saw an increase of $973,100 per household. In contrast, the middle class saw their incomes rise by less than 40 percent. [CBO, 10/25/11; CBPP, 6/25/10; CBO,10/25/11]
- Latinos are more concentrated in the low income category. 51 percent of Hispanics earned below $38,520 in 2011 compared to 36 percent of Whites who had incomes this low.
- Conversely, Latinos are less likely to earn high incomes. Twelve percent of Latinos earned over $101,582 in 2011 compared to 23 percent of Whites who had incomes this high.