FORTUNE -- Lately everyone from policymakers to fast-food workers have urged Washington to raise the minimum wage. It's a thorny topic that's spawned countless arguments both for and against an increase, but a new study suggesting that mostly the richest Americans are recovering from the Great Recession should make opponents rethink a minimum wage hike.
Income inequality has been a problem for decades, but the gap between the haves and have-nots has worsened in the years following the recession. The rise in home and stock prices may be benefitting the richest Americans, but the poorest are being left behind: From 2009 to 2012, the top 1% incomes grew by 31.4% while the bottom 99% incomes grew a mere 0.4%, according to an updated study by University of California Berkeley economists Emmanuel Saez and Thomas Piketty.
That means the top 1% took more than one-fifth of the income earned by Americans -- one of the highest levels since 1913 when the modern federal income tax started, the economists note. More than that, the top 1% incomes are close to full recovery while the bottom 99% incomes have barely started to recover.
Raising the minimum wage won't close the gap, but it could certainly ease it. Sadly proposals haven't gone anywhere and face stiff opposition. Last month, fast-food workers staged a one-day strike in 60 U.S. cities to demand a minimum wage of $15 an hour, more than double the current minimum of $7.25 and more than the $9 an hour President Obama proposed in February during his State of the Union address.
These aren't just workers looking for a raise (aren't we all), but symptoms of bigger income disparity problems. It's easy to argue against raising the minimum wage: that an increase would make hiring more expensive for companies; that it would actually raise the unemployment rate, since higher wages would encourage more people to apply for jobs; that it wouldn't help the broader economy because only a few workers actually earned the minimum wage.
That may or may not be so, but the White House has said raising the minimum wage to $9 would boost wages for about 15 million low-income workers. This of course wouldn't equal to gains the top 1% of earners have enjoyed recently from the stock market and home prices, but as the White House has said, a $1.75 increase in the minimum wage would be enough to offset roughly 10% to 20% of the increase in income inequality since 1980.
That won't close the gap between rich and poor, but it would at least help the very poor play catch-up.
Add stagnant wages to a list of woes hitting American families struggling for a life that was better than their parents had.
FORTUNE -- A key tenet of the American Dream is that each generation will do better than the last. That principle was severely shaken by the Great Recession. Most of the blame rested on the housing crisis, which forced families out of homes they couldn't afford. Now a new MORENin-Hai Tseng, Writer - Jul 26, 2011 12:26 PM ET
Think you've got stagflation? Check out the U.K.
Inflation hit 4.5% in April, the government said Tuesday, up from 4% in March. Year-over-year price increases are on their way to 5% this summer, according to official forecasts.
Yet there is no rush at the Bank of England to raise interest rates, with the economy spinning its wheels. The U.K. economy contracted in the fourth quarter and barely expanded in the first, as MOREColin Barr - May 17, 2011 10:25 AM ET
Well, so much for the U.S. economy getting off to a fast start for 2011.
Economists at Bank of America cut their first-quarter growth forecast to 1.5% Monday, saying rising commodity prices and flat wages are overwhelming the latest stimulus plan and squeezing consumer spending. BofA joins Goldman Sachs in saying the economy is softening in spite of the well publicized March job gains.
The downgrade is only the latest by BofA, MOREColin Barr - Apr 4, 2011 10:40 AM ET
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