Growing Income Inequality in Indiana and Across the Country

By Rob Krasa, LUM Intern

The gap between the 1% and the rest of the country continues to grow.  While our state falls somewhat behind the pace of the country as a whole in terms of the ever-growing increase in income inequality, the average income of Indiana’s top 1% is still more than seventeen times that of the average income of the entire remaining 99%.  In addition, in comparison to the rest of the states over the last decade, Indiana has seen some of the highest growth in income inequality when comparing the wealthiest 20% to the rest of the population.  Indiana’s middle class has seen the 5th largest decline in their share of total income across the state during that time period as well, coinciding with a recent loss of nearly 5% of the state’s manufacturing jobs – one of the largest such declines across the country.  Hoosiers who experience the far less prosperous end of these discrepancies face steep barriers to resources and opportunities readily available to those with a stronger financial foothold, including adequate health care, educational opportunities, easy access to basic needs, and stable places to call home.  Educating ourselves and each other about income equality at home and across the country – this being the first in a series of articles on issues surrounding wages and income – is the first step toward making substantive changes that can really make a difference.

Relevant policy change on local, state, and federal levels alike becomes more and more difficult to achieve for those who would benefit from it the most.  Money talks, and more often than not, politicians listen. The few and wealthy are far more able to make their voices heard in the political arena on account of the power and influence represented by their financial capital than the vast majority who do not hold such wealth.  Couple this with the fact that a disproportionate amount of non-voters fall into a family income range below $30,000 annually, and the result is often a disadvantaged, underrepresented, and disenfranchised majority who are caught between a rock and a hard place by policies supported by the wealthy minority.  

When income inequality grows, opportunities and resources for those on the lower end of the income spectrum tend to become more sparse.  Health care and nutrition are a glaring example.  Not only do those making lower incomes face barriers accessing and paying for proper health care coverage and services, but nutritional challenges contribute to these health care problems as well.  Due to much less freedom and flexibility in choosing where they live, over 16% of Hoosiers live in areas known as food deserts – parts of cities and rural areas where there is no easy access to nutritional food options, and where the food options that are available frequently come at a higher cost.  As a result, rates of nutrition-related diagnoses and complications, such as diabetes, heart disease, and many others are higher in those with lower incomes.  Conditions related to obesity like these in turn raise health care costs in America by almost $150 billion annually, which averages out to nearly $1500 per person – a cost that most cannot readily absorb.  Those living below the federal poverty line are ultimately twice as likely to die from diabetes, for example, and one study estimates that nearly 4,500 fewer Hoosiers overall would die each year if everyone statewide had equal access to health care resources.

Educational opportunities which can help people improve their financial standing become more difficult to engage as well.  This can be attributed at least in part to influence in policy by the wealthy – educational programs and support tend to come at least in significant part from public funding sources, and as the influence of the wealthy on political decision making gets stronger, funding and policy in support of such programs tends to decrease. Societies with wide income disparity like ours tend to have a lower overall education level on average, but a relatively higher number of educational elites than societies with more equally distributed income.  Income inequality not only creates resource disparity, but perpetuates a society of intellectual haves and have-nots which only reinforces the power of the wealthy.

On top of all of these concerns, it is important to remember that years and years of income inequality helps those with high incomes consolidate their assets and power.  Not only is there such a gulf in average incomes, but the inequality of wealth – a measure of total consolidated assets and net worth as opposed to how much money comes into a household in a given time – is even more egregious, and has consistently become more so since the 1980s.  The top 10% in America hold about 78% of the total wealth in the nation.  When invested and manipulated, “money makes money,” which only leads one to conclude that the problem perpetuates itself with very little effort.  Those who have accumulated such wealth, and who receive such high incomes, have the capital to keep expanding these gaps year after year, especially in the wake of the recent passing of the tax bill supported by Trump and the GOP, which cuts taxes for corporations and the country’s highest individual earners while raising taxes for nearly half of the country in the next ten years. A concerted effort to raise the minimum wage significantly not only here in Indiana but across the country is necessary to begin to balance the distribution of this wealth and bring us us at least closer to bridging the income gap.

These facts and figures can be uncomfortable and discouraging, but the best solution is to take action.  Continue to educate yourself and others regarding the wide-ranging impacts of income inequality. Support one another, by directly helping family and neighbors or by giving and volunteering when and where you can.  Learn not only about federal political races but certainly those on a state and local level, and find out what candidates are saying or planning to do about the causes and effects of income inequality. Speak out and support policy changes, such as supporting the introduction of a bill in the upcoming 2019 General Assembly session to raise the minimum wage in Indiana. The introduction of bills for this session has already begun; there’s no better time to take action than now.  And by all means, vote. Vote in all elections, whether local, federal, primary, or general. One fact stands above all others we’ve examined: the 99% will always outnumber the 1% as long as we make sure our voices are heard.

1. The new gilded age: Income inequality in the U.S. by state, metropolitan area, and county. epi.org/publication/the-new-gilded-age-income-inequality-in-the-u-s-by-state-metropolitan-area-and-county/?blm_aid=20193l#epi-toc-3
2. Economic disparity: 10 States where the middle class is being left behind. usatoday.com/story/money/economy/2018/03/01/economic-disparity-10-states-where-middle-class-being-left-behind/378376002/
3. The Party of Nonvoters. people-press.org/2014/10/31/the-party-of-nonvoters-2/
4. Indiana Healthy Food Access Coalition. http://inhealthyfoodaccess.com/
5. County Health Rankings & Roadmaps. http://www.countyhealthrankings.org/sites/default/files/state/downloads/2015IndianaHealthGapsReport.pdf
6. A Guide to Statistics on Historical Trends in Income Inequality. https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality