Ben Kirby: Indicator of next economic calamity: income inequality

This month marked the five-year anniversary of the global economic meltdown that, as the White House says, “rocked Wall Street” and compounded the “recession that was already hammering Main Street.”

Global financial institutions either collapsed or were bailed out by the government. Entire investment portfolios were wiped out. The economic autopsy revealed the ugly details: mortgage-backed securities, structured debt obligations, and over-the-counter derivatives. Five years later, economists are still assessing the damage.

Today, five years after Lehman Brothers went belly-up, the situation is framed as a “recovery,” but too often it is difficult to tell for whom the economy has recovered. The Economic Policy Institute is “a non-profit, non-partisan think tank,” leading the way on research into economic and national fiscal issues.

According to their research, in 2012 the average CEO of the top 350 firms in America earned $14.1 million — up 1.7 percent since 2011, and 34.7 percent since 2009.

The wages of the middle class have fallen in that time. From 2000 — well before the economic collapse — to 2012, median income fell from $64,843 to $57,353, a decline of 11.6 percent. Poverty rates, they note, remain quite high across the nation.

Just last week, the Washington Post produced an animated map showing that nationwide inequality grew and then ballooned out of control.

Income inequality is more than just a theoretical economic exercise. Last week, James K. Galbraith, an author, economist and professor at the LBJ School of Public Affairs at the University of Texas, warned that “rising inequality is a sign of crisis to come.”

Perhaps the worst thing five years after the global economic meltdown is that if we are in the midst of a recovery, it hasn’t much felt like it.

Rising inequality hasn’t been enough to drive lasting changes in public policy. Perhaps the warnings of another collapse will.