Editor’s note: This op-ed is by state Sen. Anthony Pollina, P/D/W-Washington.
Most of us know economic inequality in America is greater now than at any time since the Great Depression.
The wealthiest 1 percent of Americans take home a quarter of the nation’s income and control 40 percent of the wealth while, in 2011, median family income actually fell to where it was in 1997.
We should also know that inequality is growing faster in Vermont than other states.
The University of New Hampshire Carsey Institute reported in 2007 that over the last 15 years New England saw the fastest growth in income inequality of any region in America and that Vermont ranked second among all the states.
That’s right; the wealth gap grew faster in Vermont than in every other state but one.
It’s simple; they found a combination of “higher than average growth at the top of the income distribution” along with “declines in real household income” on the other end.
So, the wealthy got more while most Vermonters saw their real incomes stay the same or go down.
Research at Sam Houston State University found the wealthiest 1 percent of Vermonters saw their share of our income almost triple between 1970 and 2005. Yet, the rest of us have not done nearly so well.
Not only have we been tops in growing inequality, Vermont has also at times been tops in declining income.
The U.S. Census American Community Survey said in 2011 Vermont median household median income dropped 6.1 percent, more than any other state. In 2008, it fell 10.3 percent, again the biggest drop of any state. In 2007 we had the second largest median income drop in the nation.
The Public Assets Institute says Vermont median household income was only 2 percent more in 2009 than it was 20 years earlier (adjusted for inflation) so Vermonters had to get by on about the same income in 2009 as they had in 1989.
These numbers matter because increasing inequality hurts us all.
It hurts because it robs people of their basic needs – housing, food, heat and health care – and steals their dignity and hopes for the future. Because, when incomes drop and people are out of work they can’t pay their bills, generate tax revenues or save for the future, instead relying on social programs, putting pressure on the state budget.
It hurts local businesses because businesses need customers and people can’t spend money they don’t have.
It hurts because increasing inequality ultimately undermines the potential for a real economic recovery.
A 2010 analysis by the University of Massachusetts’ Political Economy Research Institute says increasing inequality makes low- and middle-income households poorer. Even if the overall economy is expanding, when the rich get richer prosperity doesn’t trickle down; instead the “income of low- and middle-income households falls as the income disparity rises.”
Nobel Prize economist Joseph Stiglitz says growing inequality means shrinking opportunity and the erosion of our sense of identity, fair play, equal opportunity and community.
All values Vermont holds dear.
We know some inequality is inevitable, but inequality this great is also caused by the public policy choices we make.
Vermont can make better choices. For starters, we can build a better state budget to meet the needs of all Vermonters. Restore tax fairness, asking the wealthiest to pay more. Reject Wall Street and invest more in Main Street businesses and jobs for Vermonters. Establish a Vermont state bank to invest more in Vermont businesses, entrepreneurs, farmers and students and a Vermont Credit Card with reasonable fees, and we can use our tax dollars to buy from and hire Vermonters.
For years we’ve watched — too quietly — as more of our neighbors fell into poverty, struggled to pay bills and saw their retirement savings evaporate.
Let’s do better, as we face post-flood rebuilding and more tough budget choices.
Vermont’s a leader, but fast-growing inequality is one distinction we don’t want.
We must confront growing inequality and commit ourselves to restoring balance and opportunity.
