Inequality is one of those concepts that for many people remain somewhat abstract and amorphous. There are few that are against equality, but it has difficult gaining traction in the popular debate. When you’re trapped in deprivation, debt, or low-pay then income or more hours of work becomes the measure of the solution. Equality, however framed, remains detached.
It shouldn’t be. For all of us are paying a real Euro-and-cents cost for rising inequality. Inequality has many facets – economic, social, cultural, gender, sexual. Let’s just look at one aspect – rising income inequality with the assistance of a valuable database: the World Top Incomes Database.
In 1977, the top 10 percent income group’s share of national income was 27 percent. By 2009 this had increased to 36 percent – a rise of 9 percentage points. Two years into the recession saw a drop in this share as income from the speculative bubble fell faster than the national average. However, don’t worry – Eurostat shows that since 2009 it has started rising again. While the data isn’t directly comparable (the World Incomes Database is based on tax revenue data, while Eurostat which is based on a survey of households shows little medium-term movement), an indicative number would be that it has risen to 37 percent in 2012.
Another way of looking at this is that the lowest 90 percent saw their share of national income fall from 72.7 percent in 1977 to 63 percent in 2012 (using the indicative number).
Again, this graph is abstract. So let’s play a little game. What would be the impact on households if the share of the lower 90 percent had remained the same; that is, how much more money would the lower 90 percent have today if their share of the income was the same as in 1977?
The bottom 90 percent of households would have €10.975 billion more. Nearly €11 billion spread out among approximately 1.5 million households.
- For each household, this would mean approximately €7,400 more income
Of course, there would be differences given the variations in household types (single, couple with children, single parents, etc.). And this is just a suggestive estimate. But imagine the improvement in their fortune if a low-paid couple (on €30,000 per year) were receiving an extra €140 or more per week. And compare this to the €4 weekly increase from the tax cuts, which won’t even keep pace with inflation.