Income Gap Growing in Washington: Families at risk in economic downturn

Seattle – Washington’s lower and middle income families never fully recovered from the last recession so are ill-prepared to weather the brewing economic storm, according to a national study released today that shows most families were losing ground even when the economy was growing.

The report shows that income inequality in Washington State grew significantly during the most recent period of economic growth. The highest income families saw their average income grow by nearly 12 % since the late 1990s, while incomes stagnated for those at the middle and bottom of the income scale, after adjusting for inflation.

“The continually growing income gap is a matter of broad public concern,” said Jeff Chapman, Research Director, Washington State Budget & Policy Center. “It should be a priority of national and state public policy to ensure that economic growth translates into shared prosperity.”

Census data shows Washington is one of 37 states where family incomes of the top fifth grew significantly faster than the incomes of the bottom fifth between the late 1980s and now. In marked contrast, between World War II and the 1970s, the benefits of economic growth were broadly shared by families at every income level.

State leaders have policy options that can lessen the gap and help struggling families, notes Marilyn Watkins, Policy Director for the Economic Opportunity Institute. “Washington has been a leader in some areas such as our minimum wage law. But we’ve fallen behind on others, like tax policy. Low and moderate wage earners in Washington pay a far higher percentage of their income in state and federal taxes than those in high income brackets,” she said.

Watkins and Chapman point out state leaders have recently enacted two forward-thinking solutions that can address the impact of income inequality on low- and middle-income families.

Posted in An Inclusive Economy