Rising income inequality hinders economic growth

unequal

The Organisation for Economic Co-operation and Development has pointed to growing inequality as a drag on global economic growth.

The Wall Street Journal reports that the OECD has found that the growth of “nonstandard” employment and a sharp reduction in the proportion of workers in the middle of the skills and incomes range has created a more unequal world. As a result, it’s damaging economic growth.

Add to that research from the Institute for Policy Studies in the US which found that $28.5 billion in bonuses doled out to Wall Street employees is double the annual pay for all 1,007,000 Americans who work full-time at the minimum wage of $7.25 per hour.

The OECD report, as reported here, found that an increase in income inequality between 1985 and 2005 knocked 4.7 percentage points off cumulative growth between 1990 and 2010. That was on average across a range of its 34 member countries.

The OECD report In It Together: Why Less Inequality benefits all tells us that the richest 10 per cent of the OECD eans 9.6 times the income of the poorest 10 per cent.

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