The wealth gap in the U.S. has gotten to such a high level that maintaining it without hurting the economy is unsustainable, according to Alan Krueger, the chairman of the White House Council of Economic Advisers.
"The rise in inequality in the United States over the last three decades has reached the point that inequality in incomes is causing an unhealthy division in opportunities," Krueger said during a speech at the Center for American Progress, a left-leaning think tank. "And is a threat to our economic growth."
Krueger's assertion is backed by numerous reports. The World Economic Forum's Global Risks Report found that income inequality is a threat to economies worldwide. A recent IMF report also indicates that widening income inequality is bad for economic growth.
The rising gap between the rich and the poor has become a large part of the public discourse in recent months thanks in large part to the Occupy Wall Street movement. The top one percent of Americans saw their incomes grow by 275 percent between 1979 an 2009, according to the Congressional Budget Office. At the same time, the bottom one-fifth of earners only experienced income growth of 20 percent.
The comments may come as no surprise from Krueger, a labor economist whose research has often dovetailed with other progressive perspectives. He famously co-authored a paper in 1992 arguing that that a boost in the minimum wage doesn't always increase unemployment, pushing against the beliefs of many mainstream economists.
Krueger noted in his speech that between 1979 and 2009, the percentage of income that went to the top 1 percent is bigger than the total income of the bottom 40 percent of earners. His claims mirror other reports. The richest 400 Americans, according to Forbes, have a combined net worth that is more than that of the bottom 60 percent of Americans. In addition, the six heirs to the Walmart fortune had the same net worth in 2007 as the bottom 30 percent of earners.
This marked boost in income inequality has had dire effects on the nation's middle class, Krueger noted. Middle-class households would have an extra $8,900 to spend if the median household income had grown during the 2000s at the same rate it did in the 1990s, he said in his speech.