Contrary to popular belief, income inequality has not increased since the financial crisis. A new analysis by George Washington University economist Stephen J. Rose tracked incomes from the start of the economic downturn in 2007 through 2010. It shows that the wealthiest Americans’ pre-tax income fell more than any other group’s. Thus, the gap between the rich and the rest didn’t actually widen further during the Great Recession. In fact, the recession reduced income inequality. Rose’s analysis also showed that the federal government’s response helped to mitigate income inequality. The gap is still one of the highest historically, but that’s due more to pre-financial crisis factors. “The last several years haven’t reversed more than a small fraction of the post-1980 rise in inequality,” David Leonhardt writes in The New York Times.
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