Gap Between High Income & Middle Income Americans Continues To Grow

By Pat Loeb

PHILADELPHIA (CBS) - A number of studies have documented a growth in the gap between high income and middle income Americans over the past 35 years. KYW explored its impact on productivity and economic growth.

"The free market always generates a lot of big disparities in income and wealth. It always has," said Temple economics professor Bill Stull. Stull says -- to a point-- disparities in income provide motivation, which is good for the economy.

"People feel that if they work hard, if they get themselves well-educated, they choose occupations that are difficult that they'll be rewarded and of course we want people to do that."

The question is, at what point does income inequality begin to work against economic growth. Supply siders say there is no such point. Demand siders think the flatter the income distribution, the better because the middle class drives growth. But most economists believe there is a point, somewhere in between, though they don't know where it is.

David Elesh believes the Philadelphia Metropolitan Indicators Project, on which he works, provides evidence that income inequality is already working against the regional economy. He says the local workforce is not as productive as it could be because /income barriers prevent many from getting the education they need to fill jobs or even getting to a job.

"Seventy percent of jobs are now outside the city so lack of a car meant that you did not have income," said Elesh who also says that's bad not just for the carless but for the economy that could be benefitting from them.

For more information on The Philadelphia Metropolitan Indicators Project, CLICK HERE.