Report: Arizona had nation’s second-highest disparity in incomes - East Valley Tribune: Business

Report: Arizona had nation’s second-highest disparity in incomes

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Posted: Saturday, November 17, 2012 10:00 am | Updated: 9:25 am, Mon Nov 19, 2012.

WASHINGTON — Arizona had the second-highest income inequality in the nation between 2008 and 2010, trailing only New Mexico for the gap between its richest and poorest residents, a new report says.

The report by the Center on Budget and Policy Priorities and the Economic Policy Institute said that for every dollar earned, on average, by the poorest 20 percent of the state’s population in the two-year period, the top 20 percent was earning $9.80.

It also said the gap has widened steadily over the decades. In Arizona, top earners made $5.20 for every $1 of low-income earners’ wages in 1977-1979, but it had grown to a ratio of $8.60 to $1 by 2007-2009. That was slightly faster growth than the nation as a whole, which went from 5.2 to 1 to 8.3 to 1.

“It shows inequality in Arizona is growing at a greater rate than the national average,” said David Cooper, an author of the report.

One Arizona advocate for the poor called the numbers “miserable,” and proof that the state needs to do more to help those struggling with poverty so they can get themselves out.

But Tom Rex, associate director of the Center for Competitiveness and Prosperity Research at Arizona State University’s W.P. Carey School of Business, questioned the reliability of the Arizona numbers. While the report’s methods are “solid,” Rex said the state’s small sample size makes its ranking unreliable.

“Accuracy is questionable for Arizona,” he said. “The margin of error is so large, these results may not be realistic.”

On a national level, however, Rex believes the report accurately reflects the nation’s increase in income inequality since the 1970s.

“The topic of income inequality is certainly important, and it doesn’t get as much attention as it should,” Rex said.

“If you have a large segment of the population that’s not doing well but see others doing well, it will cause resentment,” he said.

But David Azerrad of the Heritage Foundation said studies like “Pulling Apart: A State-by-State Analysis of Income Trends” only encourage resentment toward the rich. He called it deeply problematic to compare rich and poor side by side.

“It’s not about how the income of the rich has been growing quickly,” Azerrad said. “It’s about the declining income of the poor – that should be investigated.”

“If rich are prospering, good for them,” said Azerrad, who has co-authored a report challenging the importance of income inequality. He believes it would be better to focus on why the poor fare so badly and what the obstacles are to upward mobility.

Karen McLaughlin was quick to point out one obstacle: A lack of childcare support that could help low-income families get out of poverty.

Arizona froze childcare support for working parents in February 2009, and the waiting list for help had grown to 11,003 children a year later, according to a report from the state’s Department of Economic Security.

“There is no help for parents at all,” said McLaughlin, director of budget and research at the Children’s Action Alliance. “We get calls from parents all the time who seek help.”

Cynthia Zwick, who called the report’s numbers “miserable,” said safety nets for the poor continue to be eroded.

“They continue to sink into this well of poverty,” said Zwick, the executive director at the Arizona Community Action Association.

She said the annual cost of childcare can range from $7,000 to $10,000, impossible amounts on a “woefully low” minimum-wage income. The minimum wage in Arizona is currently $7.65 per hour.

“You cannot live on that,” Zwick said. “It’s not self-sustaining.”

She said people are not choosing to stay poor, but need help from the state to get back on their feet.

“We have to invest in tax-credit programs based on income,” Zwick said.

The report said wages at the bottom and middle of the wage scale have been either stagnant or have fallen over the last three decades, which McLaughlin and Zwick link to low education and service-driven industries.

“The cycle perpetuates,” McLaughlin said. “There’s poverty, which is an indicator for poor education, which means no or low paying jobs.”

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