26 Feb Focused on Support: Evaluating Economic Inequality
Over the last several years, we’ve heard a great deal about the strength of the American economy. Stock Markets have been strong on the whole with the Dow Jones Industrial Average expected to hit 30,000 this year and the US unemployment rate the lowest it has been in almost 50 years at 3.6%. It is wonderful to see this level of economic prosperity transpiring in our country, but what is not being talked about enough is the disproportionate nature of this prosperity.
Economic inequality, or the differences in wealth or income across groups of people, continues to rise in the United States. When evaluating income specifically, between 1971 and 2019, the percentage of American adults that live in middle income households decreased from 61% to 51%. During roughly that same time period, 1970 to 2018, the middle income share of the U.S. aggregate income decreased from 62% to 43% while the upper income share grew from 29% to 48%.1 The same trends hold true when evaluating wealth or net worth for households. Wealth is calculated as assets held by family including savings accounts, a home, investments, retirement funds, etc. minus debt including student loans, credit card debt, a mortgage, etc. From 1983 to 2016, the share of US aggregate wealth increased from 60% to 79% for upper income households, decreased from 32% to 17% for middle income households and decreased from 7% to 4% for lower income households.1
While several coastal states have the highest rates of economic inequality due to the large amount of wealth concentration, in the last several years states in the middle of the country have been leading the nation in year over year increases. A lack of increases to minimum wage and threats to key industries including agriculture and manufacturing are just a few of the factors leading to the growing increases in economic inequality in the middle of the country.
Economic inequality matters for a multitude of reasons, but when we evaluate what is known as the Great Gatsby Curve we understand the generational implications of this issue. Essentially what this economic model demonstrates is “the connection between concentration of wealth in one generation and the ability of those in the next generation to move up the economic ladder compared to their parents.” This model illustrates that in countries where economic inequality is higher, including the United States, it is more difficult for children born into families from both the middle and lower socioeconomic classes to increase their economic opportunity and mobility in adulthood.
While there is certainly not a universal answer to this problem of economic inequality, programs that increase and support small business ownership are certainly a critical component to the solution. Take for example the January 2020 applicant pool to LTFF’s food incubator, Kitchen 66. Of the almost 60 applications received, more than 50% had a household income of less than $35,000 and 85% had experience in the food industry. Programs like Kitchen 66 can be transformational on their impacts to economic mobility and opportunity when they are able to pair both an existing skill set in and passion for an industry with resources, mentorship and access to capital. In addition to Kitchen 66, Lobeck Taylor Family Foundation works to decrease barriers for Tulsans through various programs:
- Kiva Tulsa: 0% interest crowd-funded microloans
- Mother Road Market: providing food entrepreneurs the opportunity to use a small shop model to test and scale their concepts
- Tulsa StartUp Series: pitch competition focused on idea and early stage businesses
- revamped LTFF Grant Program: funding grants focused on improving community outcomes and economic mobility for business owners and residents alike that equitably activate the geographical area surrounding Mother Road Market and Kitchen 66
I am so inspired by the work of our organization to combat these important systemic inequalities through small business and entrepreneurship in Tulsa.
1 Horowitz, J. M., Igielnik, R., & Kochhar, R. (2020, January 19). Americans’ Views on U.S. Economic Inequality. Retrieved from https://www.pewsocialtrends.org/2020/01/09/most-americans-say-there-is-too-much-economic-inequality-in-the-u-s-but-fewer-than-half-call-it-a-top-priority/
2 Vandivier, D. (2013, June 11). What is The Great Gatsby Curve? Retrieved from https://obamawhitehouse.archives.gov/blog/2013/06/11/what-great-gatsby-curve