by Diana Furchtgott-Roth
e21 – Economic Policies for the 21st Century
January 24, 2014
President Obama has called income inequality the “defining challenge of our time,” reflecting the misguided assumption that income inequality in the U.S. has increased in recent years. Populist cries for redistribution as a means to remedy this purported inequality have gained currency in both the press and in the public imagination. This paper, based on an updated original analysis of U.S. Labor Department data, concludes that inequality as measured by per capita spending is no greater today than in it was in the 1980s. Other studies show increased inequality due to problems with current measures of inequality and failing to account for changes in demographic patterns over time. In contrast, government data on spending patterns show remarkable stability over the past 25 years and, if anything, a narrowing rather than an expansion of inequality.