Gap Growing Between Rich and Poor

Study concludes that inequality threatens the "American Dream"
The Associated Press
updated 10:58 a.m. ET, Tues., Oct. 21, 2008

PARIS - The gap between rich and poor is getting bigger in the world's richest countries — and particularly the United States — as top earners' incomes soar while others' stagnate, according to a 30-nation report released Tuesday.

In a 20-year study of its member countries, the Paris-based Organization for Economic Cooperation and Development said wealthy households are not only widening the gap with the poor, but in countries such as the U.S., Canada and Germany they are also leaving middle-income earners further behind, with potentially ominous consequences if the global financial crisis sparks a long recession.

Inequality threatens the "American Dream" of social mobility — children doing better than their parents, the poor improving their lot through hard work — which is lower in the U.S. than countries such as Denmark, Sweden and Australia, the report found.

The two decades covered in the study — 1985-2005 — saw the development of global trade and the Internet, and a period of overall strong economic growth. The countries covered are mostly developed nations, especially in Europe.

The United States has the highest inequality and poverty in the OECD after Mexico and Turkey, and the gap has increased rapidly since 2000, the report said. France, meanwhile, has seen inequalities fall in the past 20 years as poorer workers are better paid.