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The Digital Divide and the Growing Gap between the Rich and the Poor

Had a great Xmas discussion tonight with my mother, who is of a generation that remembers better times, when the gap was not quite so wide, when Americans truly had the Gov 2.0 “Do It Ourselves” mentality, rather than the “I’m in it for myself” attitude we see so often today.

She asked, and I too would like to know, if there is data available that shows the growing gap trends over time from the Roosevelt era until now. Digital Divide data, perhaps not, but census data definitely.

I would also like to see a “Bridge the Wealth Gap” strategy developed, complementary to the recent digital divide strategies that are starting to emerge.

Knowing little to nothing about tax laws, estate laws, and other laws that would help that gap to shrink, I don’t feel qualified to comment, but suspect that there are others out there who could analyze and strategize more effectively leveraging digital divide/economic gap trend data.

I would also like to see some case studies, “a day in the life” of citizens at either end of the spectrum: how they live, how they cope, and what resources they have available to them today, both for the digital divide strategists as well as the economic gap strategists.

Here is the sort of information I’d like to see charted over time:

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% of Americans — those making more than $100,000 each year — received 49.4% of all income generated in the U.S., compared with the 3.4% earned by those below the poverty line, according to newly released Census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.

At the top, the wealthiest 5% of Americans, who earn more than $180,000, added slightly to their annual incomes last year, Census data show.

Median household income was $49,777 in 2009, down 0.7% from a year earlier, a change that was not statistically different from 2008, the agency said.

“Income inequality is rising, and if we took into account tax data, it would be even more,” said Timothy Smeeding, a University of Wisconsin-Madison professor 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.”

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Profile Photo Sonny Hashmi

Megan, great post and I concur with your interests. I would also like to see such data. Interestingly, the primary factor influencing digital divide in America is wealth (see my post on Buzzfreezone.word press.com). Solving the underlying middle class/wealth divide problem would go a lo g way towards solving not only digital divide issues but a host of other issues as well including education, opportunity, etc). Thanks for your inerest in this area

Profile Photo Megan

I don’t know if census would have that information, and it might be difficult to provide certain data via privacy laws. I would be interested in generic case studies, not attached to any specific individual. The “day in the life” accounts seem like something the academic community could best provide.

The trend data would be useful in that it may show growing or shrinking gaps based on what political party was in office at that time, or other interesting or unforseen correlations that would only show up via trends over time.

Profile Photo Peter Sperry

Before proceeding too far down the income equalization path, we need to ask whether it is necessary or moral to use the coercive powers of government to do so.

The vast majority of people accept the idea that society has an obligation to ensure everyone has access to resources necessary to satisfy the bottom tier of Maslow’s hierarchy. There is a corresponding recognition that government may need to obtain resources from the wealthy through taxation to assist low income individuals in their efforts to meet these lower tier needs.

There is no similar agreement regarding equalizing income. Once a low income individual’s lower tier needs have been met, government has no further moral claim on the resources of the wealthy. Lack of food, clothing shelter, basic health care etc define real poverty and establish a moral obligation upon the more well off to provide assistance. Envy does not.

Incomes in the U.S. today may indeed be more unequal than in other times and places. So what. Most statistics I am aware of indicate less hunger (indeed obesity), reasonable levels of clothing and shelter, probable need to improve health care, and fairly meaningful efforts to ensure lower tier and even second tier needs are met.

The top 5 percent of income earners provide over 50 percent of the resources used to support government. The top 20 percent provide over 90 percent of resources. At what point does progressive taxation become legalized theft? If a mob of looters ransacked a house, most people would be horrified. Are they any more justified if they hold a vote first?

Profile Photo Michele Costanza


Megan: I don’t see how or why household incomes over a certain amount, say $150K or even $250K are included in the same scope as households that could easily live entirely off of their wealth through investment earnings, like Bill Gates or Warren Buffet. What is the difference between income and wealth?

I think it’s admirable to allow for the equality of opportunity. It’s challenging to expect equality of outcomes. For example, based on a set of environmental and social and economic factors, two hospital employees actually did have equal opportunity to either become a medical doctor or a custodian. The requirements and qualifications for the medical doctor are extensive compared to the custodian. The medical doctor has deferred a full time income and invested in years of education and training at the expense of time and money. The medical doctor must assume a certain amount of risk to practice medicine.

Based on equality of outcomes, what is a fair method of compensating the medical doctor and the custodian? Should the hospital pay the medical doctor less so the income with the custodian is equal? Or should the custodian be paid more?

Profile Photo Megan

Those are good questions. I assume there is a way to break out the census data more specifically to show those trends with nviews into the high end or the top 2% of Americans.

While I agree with you in theory, in practice it is a little more complicated. Abused children, mentally impaired children, disabilities – these are all contributing factors as to why one person chooses (or has the opportunity) to become a medical doctor vs. someone who chooses (or has the opportunity) to become a custodian.

I don’t expect to ever see an equalization of salaries or household incomes, but certainly raising the minimum wage and the child welfare payments would be a good first step.

The idea that we will see “equalization” is misguided. The general message here is that the gap has always existed and always will exist. It is really more a matter of shrinking it, or “bridging” it, to a point where it is not quite so out of balance.

I’d really like to see gap data from times when the American economy was thriving.