As talked about earlier, the middle class is slowly eroding in New Jersey and worse off than they were a few years ago. To add to that worsening situation, New Jersey is falling behind most of the country in regard to the gap between the rich and poor.
According to a report by the Center on Budget and Policy Priorities and the Economic Policy Institute, New Jersey has the country’s 11th highest gap between the richest and poorest residents. In the report, the top 20% of New Jersey households made an average of $201,024 from 2008 to 2010; 8.3 times more than the $24,268 earned by the bottom 20%.
As Gordon MacInnes, president of New Jersey Policy Perspective, would outline;
“It confirms in irrefutable detail the steady erosion in middle-class prosperity and the increased desperation of low-income workers. New Jersey is not spared despite its standing as the second wealthiest state — hard-working New Jerseyans are falling further behind what they need to raise a family.”
In 2008 when a similar study was done for 2004-2006, New Jersey ranked 14th in the nation with the top 20% earning 7.5 times more than the lowest 20%. Going further back to the late 1970s, the top 20% earned 5.1 times more than the bottom 20%. That shows that over time, the state has continued to only get worse with their economic disparity when it comes to the wealthiest and poorest residents.
Additionally, the study showed the wealthiest families earning 2.7 times than the middle class; a much higher percentage than the late 1970s but not a major jump since the late 1990s. However, income growth for the low and middle income New Jerseyans outpaced the national average from the late 1970s and mid 2000s. The bottom 20% saw their incomes grow 27% compared to the 6.9% national average and the middle 20% grew 47% compared to the 26.9% national average. But, despite what looks like optimistic numbers for lower and middle income residents; the news is even rosier for the top 5% who saw their incomes go up 162% since the late 1970s. This large disparity has sparked many conversations in Trenton over taxing the rich more and raising the minimum wage rate.
The statistics also speak to the argument for the restoration of the Earned Income Tax Credit for the working poor, creating a statewide health exchange, expanding Medicaid, and adopting a government task force to reduce poverty and help the middle class.
For Raymond Castro, a senior policy analyst with New Jersey Policy Perspective,
“There appears to be no end in sight in growing inequality in New Jersey, unless state policies are established to address this trend. Reducing inequality is the right thing to do, and it makes economic sense.”
While conservative activist Steve Lonegan warns against any major actions listed above. As Lonegan would exclaim,
“New Jersey has one of the highest unemployment rates in the country, one of the highest outbound migration rates, we’re rated as one of the two worst states in the nation to start a business. If you want to correct that and close the income gap, cut taxes on job producers.”
There has certainly be flaws in the economic status of the top and bottom tier residents in the state. Over the last 30 plus years, the wealthy have gotten wealthier at a large rate than the poor or middle class have seen income growth. It does bring many legit questions and potential solutions already being talked about in Trenton. Ensuring the poor and middle class do not sink further away from the wealthy is something to continue to monitor in the coming months and years.