Income inequality unfair – and deadly

Bill Knight column for Mon., Tues., or Wed., May 21, 22 or 23


Thirty years ago, CEOs at the largest U.S. corporations were paid about 42 times as much as their average worker. Last year, chief executives from companies in Standard & Poor's 500 stock index made 380 times more than a typical American worker, according to the AFL-CIO.

Now, a new study from a researcher at Ohio State University shows that higher levels of such income inequality in the United States actually lead to more deaths in the nation over time.

Since the economic crisis of 2008, there’s been more attention on income inequality, not just from economists and social scientists, but also from protesters who occupied Wall Street and politicians who occupy seats to represent us. Regular Americans increasingly notice the disconnect, like when JPMorgan CEO Jamie Dimon – who admitted the country’s biggest investment bank recently lost up to $3 billion in risky trading – was paid about $23 million last year and also in 2010, and his ousted investment executive Ina Drew made $15.5 million last year and $16 million the year before.

"It's been unfair to workers around the world, and different countries have had different ways of dealing with it,” said Timothy Noah, author of the new book “The Great Divergence: America's Growing Inequality Crisis and What We Can Do about It.”
“The big issue going forward is going to be off-shoring jobs,” Noah added.

Put another way, income inequality is obvious when comparing percentage changes in pay. CEO pay increased more than 725 percent in 30 years while worker pay rose just 5.7 percent, according to a study by the Economic Policy Institute released this month. U.S. CEOs saw their pay go up 15 percent last year alone (after a 28 percent raise the year before), according to a report by GMI Ratings. Meanwhile, workers’ inflation-adjusted wages fell 2 percent in 2011, according to the U.S. Labor Department.

Ohio State’s findings suggest that income inequality at any one point doesn't work instantaneously – it begins increasing mortality rates five years later, and its influence increases for years afterward.

"This finding is striking and it supports the argument that income inequality is a public health concern," said Hui Zheng, author of the study and assistant professor of sociology at Ohio State.

Appearing in the journal Social Science and Medicine and based on data from the U.S. National Health Interview Survey, Zheng’s research sample included more than 700,000 adults. In contrast to dozens of studies that looked at income inequality at a specific time and its effects at a specific later time, Zheng’s analysis allowed for delayed consequences.

"Current mortality isn't just affected by income inequality at one time, say, 10 years ago,” Zheng said. “It is also affected by income inequality nine years ago, and 11 years ago, and the current level of inequality, and so on.

"For the first time, we can clearly capture the long-term effect of income inequality on health," he continued. "Previous studies are likely to miss the effect if the mortality follow-up period is too short for income inequality to exert its impact or too long for income inequality to maintain its influence."

His conclusion?

"Income inequality has a substantial effect on mortality," he said. "None of these negative factors caused by income inequality will have an immediate effect on chronic illness and mortality. But over time they take a toll on health, which can eventually lead to sickness and death. That's why this study found that it takes five years for the effects of income inequality to appear. The evidence is growing clearer that income inequality has a long-term detrimental impact on individual health and mortality.”

Another study released last month disputed the relative gains and losses of the wealthy and the middle class. Cornell University professor of policy analysis and management Richard Burkhauser offered a “second opinion” and contends that the middle class (if not the average worker) saw pay hikes of up to 37 percent since 1979. However, his analysis doesn’t seem to account for changing jobs and includes “in-kind income” from Social Security and other government assistance, the value of health insurance, and household size differences.

Zheng’s study is consistent with historic measurements. However, in some ways, it confirmed the obvious: The interests of the wealthy tend to diverge from the rest of society, he shows, so the wealthy may demand more government benefits or services for themselves, rather than invest in education or affordable medical services – which can affect health for society. Further, such inequality reduces social cohesion and trust, and it creates more frustration and depression when people feel unable to achieve lifestyles culture promotes.

"The affluent and the middle class really constitute two separate cultures that are deeply alienated from one another,” said Noah. "Even conservatives have started to recognize this."