Labor-Related Income Archives | Economic Equality

By Karen Petrou

An influential new Fed staff study asserts that increased market power is to blame for much of U.S. income inequality over the past forty years, discounting monetary policy’s impact after 2008 by looking only at inflation, not also at QE and ultra-low rates.
Incorporating these factors into its construct and reviewing other research suggests a large causal role also for post-crisis monetary policy.
Which is worse is yet to be told, but it seems clear that market concentration, monetary policy-fueled asset-valuation hikes, and ultra-low rates exacerbate the structural factors on which the Fed continues to blame economic inequality. Indeed, concentration and post-crisis policy are likely to be considerably more causal than the prolonged decline in educational quality, demographic shifts, increased innovation, and perhaps even regressive fiscal policy.

By Matthew Shaw

While much of the inequality debate focuses on the gains of “the 1%,” less attention has been paid to the economic well-being of what is broadly termed the middle class, which is all too often just lumped into the other “99%.” However, focusing the debate on only the 1% obscures important trends within each of these groups, including that there is ample evidence that the gains of the 1% are largely driven by the wealthiest among this already-elite group along with diminishing prospects for the rest of us. Today, we look at one of these groups with diminishing prospects and a concerning trend recently highlighted by IMF staff: the “hollowing out” of the U.S. middle class. Continue reading “The Morass That Swallowed the Middle Class” →

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