Michigan income inequality 11th worst in nation, wealthiest 1% make 22 times more than rest of workers

New League analysis to examine income inequality, severe impact on women and workers of color

LANSING—Michigan has the 11^th worst income gap in the nation according to a new fact sheet, Time to End Income Inequality, issued today by the Michigan League for Public Policy. The fact sheet shows that the top 1% of Michigan’s earners make 22 times more than the bottom 99%.

“Instead of moving Michigan forward, a majority of state policies have been pulling Michigan apart, most noticeably with the widening income gap,” said Karen Holcomb-Merrill, vice president of the Michigan League for Public Policy. “While our state’s economy has recovered for some, poverty is still a major issue for many others—including those with full-time jobs. We are all for financial success, but lawmakers must make sure our public policies are fair to all and helping those with the greatest need. Right now, they’re not.”

After relatively similar growth for all income levels for 30 years, the fact sheet shows that from 1979 to 2000, incomes for the top 1% of workers increased 100%—while the rest of workers experienced an income decline of -.2%. That created a huge income gap in Michigan that continues today. The richest residents’ share of Michigan’s total income has also grown dramatically. In 1979, the top 1% of Michigan households held about 9% of the total income in the state. By 2013, the top group’s income share had nearly doubled to 17.9%, while the rest of Michigan residents saw their incomes decline.

Michigan women and people of color are particularly hurt by the gap, with Michigan ranking among the worst nationally in gender pay disparities. According to the most recent data, annual median earnings for full-time working women in Michigan are $12,738 less than men, with women making 74.6 cents on the dollar earned by men in 2014. The most recent wage data available by race shows that in 2012, workers of color made $3 less per hour than white workers, and that racial disparities are unrelated to a worker’s education. The League will be producing a series of fact sheets on income inequality to look at these issues closer.

“Income inequality is obviously a pocketbook issue, but low wages negatively affect workers and their families in so many ways,” Holcomb-Merrill said. “Low incomes hurt the financial standing of future generations. Lower-wage earners are also less likely to have employer-sponsored healthcare and paid sick and family leave, and have greater difficulty saving for their retirement or a child’s college education. Michigan’s kids, workers, neighborhoods and economy will all benefit from greater income equality.”

With the League’s focus on translating data into policy change, the fact sheet also outlines recommendations for state policymakers to reduce income inequality, including:

• Further raising the minimum wage or eliminating the tipped wage;
• Expanding access to high-quality child care;
• Enacting earned paid leave policies;
• Restoring Michigan’s Earned Income Tax Credit (EITC) to 20% of the federal credit;
• Expanding the Homestead Property Tax Credit;
• Implementing a fairer income tax, such as a graduated income tax, and other equitable tax changes (Michigan’s lowest income earners pay nearly double the rate in total state and local taxes of the top 1%);
• Improving K-12 education, especially for children at risk of educational failure;
• Increasing adult education; and
• Expanding access to post-secondary education.

The fact sheet utilizes national, state and local data recently released in a report by the Economic Policy Institute and Economic Analysis Research Network as well as income information from the Census’ American Community Survey and the National Equity Atlas.

The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

*This has been reproduced in whole from the Michigan League for Public Policy’s press release on 7/26

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