Commentary: Utah is not immune from the effects of yawning increases in inequality

(Eric Risberg | Associated Press file photo) In this Feb. 23, 2016, photo, a man stands outside his tent on Division Street in San Francisco. San Francisco voters will decide in November whether to tax large businesses to pay for homeless and housing services in a city struggling with income inequality. Supporters collected enough signatures to get the measure on the ballot.

As most individuals and families in the country are acutely aware, the nation is in the midst of a middle-class squeeze as incomes become ever more polarized. The struggle for even two-earner households to cover such basic needs as housing, transportation, medical care and child care is intense. A Sept. 13 news article in The Salt Lake Tribune providing evidence of a relatively low level of inequality in Utah would seem to suggest that such strains do not apply here — or at least not as much as in the rest of the nation.

In fact, a fuller assessment of evidence reveals that Utah is not immune and in some ways is not well-positioned for the economic and social scourges rendered by growing inequality — what we characterize as “the great polarization.”

The danger of a snapshot is to foster complacency in the presence of an alarming trend. And in fact, the trend in inequality does not augur well for Utah. Going back 100 years, Utah has historically been tucked just below, but parallels in lock-step, the trend in inequality of the nation as measured by the share of income going to the top 1 percent of income holders, based on IRS data. In the recent era of rising inequality, beginning in the mid-1970s, the share of income going to the upper 1 percent in Utah peaked at close to 20 percent in the aftermath of the Great Recession — more than double the rate during the mid-1970s.

Utah ranks almost dead center in the ratio of average family incomes of the top 1 percent ($1,057,066) to the bottom 99 percent ($53,614), at nearly 20 to 1. Unlike the country as a whole, for which the so-called Gilded Age of the late 19th and early 20th centuries holds the dubious distinction of most concentrated income, the recent peak of concentrated income in Utah exceeded that at any time extending back a century.

Conceding that the top 1 percent has done exceedingly well, what about Utah’s performance across the rest of the income spectrum? Here Utah again tacks close to many other states. The bottom 5 percent of income earners in Utah saw their real income decline by more than 10 percent from 1990 to 2014. The median household saw no change in real income at all during that period, while the upper 1 percent reveled in a greater than 75 percent increase, among the highest rates in that rarefied group in the nation.

Take a specific occupation — public-school teachers — composed disproportionately of women, which has traditionally been a bulwark shoring up middle-class families. Nationwide, teachers now earn 76 percent of what their counterparts with college degrees earn. But in Utah, teachers earn 68 percent, placing the state eighth lowest in the nation. Indeed, Utah’s public teachers’ real salaries have dropped by nearly 6 percent since 2000.

What of that critical defining facet of the American ethos, economic opportunity — moving up the economic ladder through hard work and determination? In the recent era of rising inequality, the economic prospects of children have been disturbingly more tied to the economic status of their parents than in the past as upward intergenerational mobility across the country has notoriously declined. Utahns might take solace that by certain measures of economic mobility, Salt Lake City ranks relatively high among large metropolitan areas, but the city as well as the state again has not been immune from the grinding trend of decreased prospects in the face of yawning increases in inequality. There is growing and widespread concern among parents now that their children’s economic well-being will plateau below their own.

What factors drive these ominous trends nationwide and in Utah? Among economists, the debate often revolves around inevitable market forces, chief among them globalization and technology, on the one hand, and the distortion of political processes and democratic institutions at the behest of the top 1 percent on the other. It is imperative that citizens achieve greater command of which factors are dominant in order to productively engage in the public discourse and guide appropriate interventions and policies around rising inequality.

This happens to be the focus of this week’s “Great Polarization” conference, which will be kicked off by Nobel Prize-winning economist Joseph Stiglitz’s keynote address. All are invited and welcome. We are complacent at our peril.

Norman J. Waitzman | The University of Utah

Norman J. Waitzman is a professor and chairman of the Department of Economics at the University of Utah.

Rudiger von Arnim | The University of Utah

Rudiger von Arnim is an associate professor in the U.’s Department of Economics.