Rising inequality in Oklahoma as lower- and middle-class incomes stagnate

Incomes for poor and middle-class families in Oklahoma have stagnated since the late 1990s, with nearly all of the growth in income going to the wealthiest households, according to a new report by the Center on Budget and Policy Priorities and the Economic Policy Institute.

The report, Pulling Apart: A State-by-State Analysis of Income Trends, provides a troubling snapshot of how households at different income levels are doing in Oklahoma. Since the 1970s, inequality between the top and middle saw the third highest increase in the nation, behind only Connecticut and California. Over that time, average household incomes for the wealthiest fifth of Oklahomans grew 63.9 percent, compared to just 16.0 percent for the middle fifth and 5.3 percent for the poorest fifth. Today Oklahoma ranks eighth worst for the income gap between the top and the middle.

A common argument made by those who defend rising inequality is that the overall pie is increasing for everyone, even if the rich gain the most. The latest numbers show that isn’t true. During the most recent economic expansion [1998 to 2007], the incomes of the richest fifth of households grew by 7.7 percent while incomes for the middle fifth remained stagnant and incomes for the poorest fifth fell by 7.5 percent.

The report echoes recent Census numbers showing Oklahoma’s median income remained flat in 2011, despite the growth in total personal income. Some in Oklahoma are doing very well, but their wealth is not trickling down to average families.

The report finds that income gaps between the richest households and both the poorest and middle-income households have widened significantly in all states since the late 1970s. Inequality is rising for a range of reasons, including long periods of high unemployment, more intense competition from foreign firms, a shift from manufacturing to service jobs, and a minimum wage that has not kept up with price increases. 

Many of the reasons for growing income inequality are outside of the control of states.  However, Oklahoma policymakers can take a number of steps to make our economy work better for everyone. Recommendations include:

• Make state tax systems less regressive. Good options for doing this in Oklahoma include exempting groceries from the sales tax and expanding the state Earned Income Tax Credit.
• Strengthen supports for low-income workers. We can improve the health of low-income workers by joining the Medicaid expansion. We should also invest more in workforce training and other programs that help low-income adults gain entry to occupations that offer better wages, opportunities for advancement, and stable employment.
• Raise the minimum wage and tie it to inflation so it keeps pace with rising costs. The purchasing power of the federal minimum wage is 13 percent lower than at the end of the 1970s. Its value falls well short of the amount necessary to meet a family’s basic needs.

The joint CBPP/EPI report, as well as a press release and state fact sheets, are available at http://www.cbpp.org/cms/index.cfm?fa=view&id=3860.

See an infographic with the Oklahoma data at http://www.cbpp.org/files/pullingapart2012/Oklahoma.pdf.