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David Leonhardt Notes Surprises on Income Inequality

We read with interest David Leonhardt’s story in this morning’s New York Times about a study out of George Washington University that highlighted the state of income inequality in America, with some surprising findings. The study, by GWU economist Stephen J. Rose, concluded that income inequality has not actually risen since the financial crisis started in 2007.

Rose’s analysis shows that the wealthiest Americans saw the largest reduction in pretax incomes of any group during the crisis, while government interventions to blunt the crisis’ effect mainly helped those who were not wealthy, Leonhardt reports. As a percentage of their 2007 pretax income, the top earners are still further behind than the other 99 percent, according to Rose’s analysis.

Leonhardt states income inequality is still “extremely high from a historical perspective,” but writes of the government’s work to combat income inequality: “These efforts weren’t aggressive enough to bring major raises to most families. The financial crisis was too big, and Washington’s response was too restrained. Yet the efforts were aggressive enough to make a difference. They are a reminder that rising inequality is not inevitable, and that the country has the power to shape its economy.”

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