Income gap is bad for all of us

By Greg Garvan

Here’s a news flash for those of you who have been “Rip van Winkling” over the past 30 years. The U.S. approach to encouraging the ‘rich get richer, the poor get ….’ is hurting all of us.  Big surprise!  This is one reason why social investing, community impact, micro-credit lending, etc. matters.

This article on a recent AP survey of economists explores some of the reasons behind their conclusion:

A key source of the economists’ concern: Higher pay and outsize stock market gains are flowing mainly to affluent Americans. Yet these households spend less of their money than do low- and middle-income consumers who make up most of the population but whose pay is barely rising.

“What you want is a broader spending base,” says Scott Brown, chief economist at Raymond James, a financial advisory firm. “You want more people spending money.”

Economists appear to be increasingly concerned about the effects of inequality on growth. Brown says that marks a shift from a few years ago, when many analysts were divided over whether pay inequality was worsening.

Now, he says, “there’s not much denial of that … and you’re starting to see some research saying, yes, it does slow the economy.”

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Greg Garvan

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