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Income inequality grows in TN

12:37 PM, Nov 15, 2012   |    comments
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By Michael Cass | The Tennessean

Incomes for the bottom 20 percent of Tennessee households fell by 12 percent over the course of nearly a decade, increasing the gap between the state's haves and have-nots, according to a new report.

The report by the Center on Budget and Policy Priorities and the Economic Policy Institute found income inequality grew in 45 states, including Tennessee, between the late 1990s and the mid-2000s. Those were the last two periods when the economy was at or near a peak, according to the authors, and therefore a fair framework for comparing income gaps.

Nationally, when adjusted for inflation to 2009 dollars, incomes dropped by 6 percent for the average low-income family, the study found, and rose by 8.6 percent for the top 20 percent of households.

Average household income for the richest 20 percent of the state's households from 2008 to 2010 was 7.8 times as high as the average household income for the poorest 20 percent, giving Tennessee the 19th-widest gap in the nation, the study says. New Mexico had the widest, 9.9 to 1.

"The lion's share of growth has gone to the high end, whereas the incomes of low- and middle-income households have stagnated or even declined," said Doug Hall, a co-author of the report. "That's clearly not a recipe for shared prosperity."

Hall said on a conference call with reporters from around the country Wednesday that income disparities were greatest in the Southeast and Southwest because of those areas' high concentrations of "traditional, low-wage nonunion jobs."

Elizabeth McNichol, another co-author, said households on the bottom and middle steps of the American economic ladder have struggled in an economic climate marked by long periods of high unemployment, which kept wages down; globalization, which has forced U.S. workers to compete for jobs with workers in other countries; a shrinking pool of manufacturing jobs; and a federal minimum wage that hasn't kept pace with the cost of living.

McNichol said the income drop for Tennessee's lowest earners was "very significant." She said the lack of a state income tax probably played a role in the advances made by the most prosperous residents compared with the poorest ones.

"Tennessee does have a very regressive tax structure that would tend to widen the gap," she said.

But the idea of implementing a state income tax has been a political dead letter since 2002, when protesters honked horns outside the Capitol as the General Assembly considered legislation inside. Most candidates for legislative posts and the governor's office have refused to reconsider it.

"I'm going to leave it to some think tank up in D.C. to call our system regressive where the citizens get to keep their money," said state Rep. Kevin Brooks, R-Cleveland, the assistant House majority leader. "I kind of think that's the point."

Contact Michael Cass at 615-259-8838 or mcass@tennessean.com.

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