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.

ABOUT THE AUTHOR

Gene Perry joined OK Policy in January 2011. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism. Gene also serves on the board of the Oklahoma Sustainability Network, is a trustee of the Oklahoma Foundation for Excellence, is a member of Investigative Reporters and Editors, and has chaired the communications advisory committee for the State Priorities Partnership, a nationwide network of state fiscal policy think tanks. He lives in Tulsa with his wife Kara Joy McKee, who is a Tulsa City Councilor.

6 thoughts on “Rising inequality in Oklahoma as lower- and middle-class incomes stagnate

  1. Great article. However, I do have a concern with one of the “fixes”. The elimination of the sales tax on groceries is laudable but i’m affaird that it would be a virtual death nell for many small and rural Okkahoma towns. Sales tax is about all they have to run city services.

  2. It seems to me (without doing a lot of research) that as the unions have declined so has the average income stagnated for everyone but the wealthiest.

  3. Oklahomans need to understand that the state government is not interested in equality. Individuals are going to have to fight for equality on their own, without government help. We need to show the average poor and middle class Oklahoman how the system is working to keep them down. We need to wake them up and open their eyes to reality. We need to take action………….

  4. As an individual who works for a living and yes my wages are stagnate. I do not want to see an increase in minimum wage. This is the biggest example of the trickle down effect. Every thing gets more expensive to pay for the wage increase but and it is a big but because I earn more then minimum wage I don’t get a pay raise. The reality is you will never support a family on minimum wage. We do need retraining programs for the unemployed. So many unemployed need help diversifying their skills.

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