OECD report on Income Inequality
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- Published on Wednesday, 14 December 2011 07:16
- Written by John Draper
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Not only do many countries have income inequality but the difference between the rich and poor is getting bigger. OECD have some long reports and even their summaries are long but I want to focus on a small part and show that inequality is getting worse - especially in the U.S. but even in the U.K., Australia and Canada. To measure inequality, the OECD uses the Gini coefficient. If everyone had the same income, it would be 0 and if one person had all the money, it would be 1. They don't list all countries but look at the ones they do show and look how they have become more unequal in about 10 years.
OK that's bad enough, but what about the famous 1%? The 1% who "have all the money". What percent do they really have in the U.S. and other countries. That is, taking the 1% of the population who get paid the most, what percentage of the country's total income do they get? Full equality would mean they'd get 1% and 10% means they'd be getting 10 times more than average. (See second graph.)
Other studies show that the difference between the average and lowest is equally high (see last graph below). This is the situation that the Wall street occupiers were trying to complain about. I think the actual ratio is not the worst part of the problem; it's that it's getting worse - and that's true in most countries with the exception of a few. This is "before tax" income so does not include any attempt by Governments to equalize incomes.
The situation is not particularly related to religion since the U.K. is almost as bad as the U.S. and they are much less religious. But I must say that religion has not helped the problem either. I hear no ministers or priest ranting about the inequality. Maybe they are too busy soliciting donations. It's also not related to the overall level of prosperity since the ones lowest on the chart are about equal to the U.S. in prosperity.
Income at the lower end
Below is the range of income in Canada - almost 20% of income earners get less than $10K - about 4% get $125K or more. You can see from the 
graph that just over half of earners get less than $30K per year. Many only survive because they have a partner (spouse) who also has an income.
I don't have an answer but I certainly think that this inequality is a problem. Some degree of inequality has to exist to provide a motivation to work but not numbers higher than about 5 or 6 (in the second chart above). Apart from simple injustice, this difference in income is also an invitation to crime and unrest. I predict there will be more Wall street occupiers unless this is addressed.
This data is from an OECD report. Download a copy here.