Growing Inequality Threatens Georgia’s Economy

Posted by Wesley Tharpe

We often hear about the social and cultural differences that divide Georgians of different backgrounds –but what about the economic differences that divide Georgia too? The state’s gap between the haves and have-nots has never been greater, and unless reversed, it will continue to undermine opportunity and economic growth.

Georgia has the 4thlargest income gap between the poorest and richest households, according to Pulling Apart, a new study by the Economic Policy Institute and Center on Budget and Policy Priorities. The gap between the wealthy and middle class is just as bad, with Georgia having the 3rd largest disparity between the richest 20 percent and middle 20 percent in the late 2000s.After decades of expanding inequality, the wealthiest 5 percent of Georgia households now have average incomes about 16 times as large as households in the bottom 20 percent and five times as large as those in the middle 20 percent (see Figure).

 

 

Additional data confirm that this inequality is closely related to issues of education and race. Simply put, Georgians with less education, or who are black or Hispanic, tend to earn less and suffer more acute unemployment. For example, in 2011 the median wage for African-Americans was only 73 percent of the median wage for whites, while the median wage for Hispanics was only 62 percent of whites.On education, the differences are equally striking– between 2008 and 2011, the average unemployment rate was 17 percent for high school dropouts and 11 percent for high school graduates, but less than 5 percent for those with a college degree.Further details on Georgia’s inequalities of race and education can be found in GBPI’s new report, State of Working Georgia 2012.

Since inequality is so closely tied to national trends and policies, there are no silver bullets for Georgia to fully address the issue all on its own. But there are definitely things the governor and legislature could do to help, such as expanding and fully funding educational initiatives like universal pre-K, which improve learning and earning prospects for life. Strengthening Medicaid and unemployment insurance would also be valuable, since they prevent struggling, low-income Georgians from falling farther through the cracks and provide them with a hand-up toward success.

The end goal should be for Georgia to be a state where prosperity is widely shared and where opportunities for success are available to all, regardless of one’s race, ZIP code, or parents’ income. Reaching that point won’t be an easy road, but at least acknowledging these disparities is critical to moving forward.

 

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