The Wage Gap is being Fueled by the Gas Gap

In a society like ours is now — in which most of the gains from growth are going to the top earners, and the very top 1 percent has about 20 percent of all income (and a far greater share of all wealth) — almost every major issue has a large distributive consequence. But because economists and policy analysts, and the members of the media who follow them, are more used to thinking about efficiency than about distributional equity, these consequences are rarely discussed.

Consider gas. As I noted in yesterday’s Times, the bottom half of the American work force ­– everyone who will earn less than about $42,000 this year ­– is getting hit by the equivalent of a whopping regressive tax in the form of soaring gas prices. And fuel isn’t a discretionary item like cable TV that can be cut from the family budget.

On average, Americans now spend 4 percent of their income on gas. But this figure varies significantly. People who live in impoverished Wilcox County in Alabama, for example, spend 16 percent of their income on gas, while residents of affluent Hunterdon County in New Jersey spend 2 percent.

Poorer Americans also tend to drive older cars that get lousy mileage. They don’t trade them in as often as wealthier people do, and can’t afford hybrids or new models that use gas more efficiently. And it’s not unusual for their jobs to require them to haul stuff from one place to another in pickup trucks or vans that guzzle even more gas.

Low-wage workers in rural areas are taking the biggest hit, but those who work in cities aren’t faring much better. It used to be that the very poor inhabited central cities and the working class lived in the inner suburbs, but now that the rich are moving back into town, the poor are being pushed outward. Retail, restaurant, hospital and hotel employees who work in upscale cities often must look 30 to 50 miles from their jobs for affordable housing. Their longer commutes mean they need to spend more on gas.

It’s true that those on the bottom half of the economic ladder make greater use of public transportation, but they’re having a harder time finding it. Budget constraints are causing states and cities to reduce rail and bus services. A survey of the nation’s public transit agencies released last month showed that 21 percent of rail operators and 19 percent of bus operators are cutting service.

The wage gap in America continues to widen. And the gas gap is giving it additional fuel.


Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.

One Response to "The Wage Gap is being Fueled by the Gas Gap"

  1. villager   July 7, 2008 at 8:22 am

    Similarly, if a country like Canada moves to implement a national carbon tax scheme applied to consumers, the effect would be harshest on the lower levels of the income distribution. I heard an "expert" yesterday say that the carbon footprint is as much as 4 times greater for people in the upper income distribution than it is for people in the lower income distribution. Yet politicians and and their policy makers seem to want to "punish" relatively poorer people for the excess of the rich.