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With Stock Market Boom, Gap Widens
Between Rich and Poor

Associated Press
Two think tanks report the booming stock market is widening the income gap between the poorest and richest U.S. families.

The earnings for the poorest fifth of American families rose less than 1 percent between 1988 and 1998 but jumped 15 percent for the richest fifth, the Center on Budget and Policy Priorities and the Economic Policy Institute said in a report issued Tuesday.

Income for the poorest families — defined as two or more relatives living together — rose $110 to $12,990 during the 10-year period. For the richest families it increased by $17,870, to $137,480, more than 10 times that of the poorest sector, the report found.

"The benefits of this (economic) growth have not been evenly distributed," said Elizabeth McNichol, one of the study's authors. "The incomes of the poor and middle class have fallen or stagnated."

McNichol attributed the widening gap to Wall Street's long-running bull market, which favors wealthy investors; lower-paying service jobs replacing manufacturing jobs; and the largely stagnant minimum wage.

The gap between rich and poor was widest in New York, with the poorest fifth earning $10,770, down $1,970, while the wealthiest group earned $152,350, up $19,680. Income was most evenly distributed in Utah, where the poorest families had incomes of $18,170 and the richest $125,930.

The income gap narrowed in just three states — Alaska, Louisiana and Tennessee.

Stephen Moore, director of social policy for the Cato Institute, said the study contorted data to put a negative face on a "spectacular economy."

"The rich are getting richer but the poor are getting richer too in this expansion," said Moore.

The Center on Budget and Policy Priorities and the Economic Policy Institute are nonprofit, nonpartisan organizations pushing for changes in tax laws and other federal policies to benefit low-and moderate-income families.

The study used before-tax data from the U.S. Census Bureau. The figures were adjusted for inflation.

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