New York Times, Income Inequality — Too Big to Ignore, by Robert H. Frank (Cornell University, Johnson School of Mannagement):

People  often remember the past with exaggerated fondness. Sometimes, however, important aspects of life really were better in the old days.

During the three decades after World War II, for example, incomes in the United States rose rapidly and at about the same rate — almost 3% a year — for people at all income levels. America had an economically vibrant middle class. Roads and bridges were well maintained, and impressive new infrastructure was being built. People were optimistic.

By contrast, during the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale. The share of total income going to the top 1% of earners, which stood at 8.9% in 1976, rose to 23.5% by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7%. …

In a recent working paper based on census data for the 100 most populous counties in the United States, Adam Seth Levine (a postdoctoral researcher in political science at Vanderbilt University), Oege Dijk (an economics Ph.D. student at the European University Institute) and I found that the counties where income inequality grew fastest also showed the biggest increases in symptoms of financial distress.

For example, even after controlling for other factors, these counties had the largest increases in bankruptcy filings. Divorce rates are another reliable indicator of financial distress, as marriage counselors report that a high proportion of couples they see are experiencing significant financial problems. The counties with the biggest increases in inequality also reported the largest increases in divorce rates. …

No one dares to argue that rising inequality is required in the name of fairness. So maybe we should just agree that it’s a bad thing — and try to do something about it.

(Hat Tip: Ann Murphy.)