Just In: The Latest Damage Report

The damage caused by Tropical Storm Irene is clearly evident to anyone driving even a few miles in south-central Vermont. The damage from economic policies of the last 30 years has been harder to spot, but it’s becoming visible in statistics like those released on Thursday by the U.S. Census Bureau. In Vermont, between 2008 and 2010:

• Median household income dropped 7.0* percent.
• The poverty rate for female-headed families with children jumped from 28.4 percent to more than 40 percent.
• The share of people relying on food stamps rose from 8.7 percent to 13.2 percent.
• The number of unemployed climbed from 15,438 to 26,327, and another 4,400 people dropped out of the labor force.

These statistics are the result of the recession and a painfully slow—some would say non-existent—recovery. They are also what we’d expect to see as the result of public policies that have concentrated more and more income in the hands of the wealthy and left the poor and middle class behind.

In Vermont, as in the rest of the country, the gulf between rich and poor has been widening for the last 30 years. The bottom 90 percent of Vermont earners received 70 percent of the income in 1980. By 2005, that had to dropped to less than 60 percent—about the same share they had before the Great Depression 75 years earlier. A study published by the Federal Reserve Bank of Boston a few years ago revealed that between 1989 and 2004 income disparity grew faster in Vermont than in every other state but Connecticut.

What does income disparity have to do with poverty? Increased income disparity makes low- and middle-income households poorer. That was the conclusion of Jeffrey Thompson, a research economist at the Political Economy Research Institute at the University of Massachusetts, and Elias Leight, a tax analyst with the Congressional Budget Office, in a paper published earlier this year. According to their study, when the rich get richer, prosperity doesn’t trickle down to the rest of us, the poor and the middle class simply end up with less.

This growing income disparity is not the result of mysterious, immutable laws of economics. It is the result of the policies enacted by the public officials we elected. That’s the sad part. The good news is that we can adopt better policies. We can start by recognizing that trickle down didn’t work and, in fact, made things worse. Then we can establish policies that strengthen the middle class and help build a state that works for everybody.

*Corrected 10/14/2011. Decrease in median household income was initially reported as 9.3 percent.