Report: Income Inequality Rises in NJ as Top-Tier Earners Get Wealthier

EDISON, NJ—A report released by Edison-based Legal Services of New Jersey (LSNJ) found that income inequality has continued to increase in New Jersey, even after the economic recession from 2007-2009.

“Mirroring much highlighted national trends, New Jersey income inequality has worsened markedly since the advent of the new millennium,” says the overview section of the report.

Income inequality is defined as the extent to which income is distributed unevenly among a population, according to inequality.org. 

The overview describes the research method. It refers to the approach as “a familiar research framework.” Household incomes were broken down into five equal-sized income groups or “quintiles.”

The report explores changes in the share of income accumulated by each group, comparing the periods before, during, and after "the recession," which ended in July 2009.

Additionally, the report compares “how different-socio-demographic groups fared.”

Key findings highlight that the income divide between the top 20% and all the other income groups has increased since the end of 2009. And the two groups of households with the lowest average income has decreased since 2009.

Only the top-earning group of households has begun to see their income grow in the period since 2010.

Another key finding is that, since the end of 2009, the portion of income held by the top-earning group has increased steadily, while the share of income for the bottom 80% has consistently decreased as the gap between rich and poor widened.

Interestingly, only the wealthiest group of earners has gained income in the last four years.

“Racial and ethnic disparities in income inequality have been increasing in New Jersey since the recession,” reads another key finding.

Declines in middle household income have been much larger for blacks and Hispanics since the recession.  White and Asian non-Hispanic households have acquired an unequal share of total income compared to either Black non-hispanic or Hispanic households.

"This is unsettling, discouraging, and challenging most of all," NJLS President Melville D. Miller Jr. told NJ.com. "It's a national issue as well as a state issue, but New Jersey's high cost of living makes it a sharper issue here."

Miller added: "I think in New Jersey, we have a very serious poverty problem. In general, it’s not part of the political conversation. It gets attention periodically, but then it fades from our memory," 

LSNJ provides free legal assistance to low-income New Jersey residents in civil cases. Its vision is full access to civil legal aid for all economically-disadvantaged people.

In 1997, it created the Poverty Research Institute (PRI) to harvest data that would help it achieve its mission of providing legal aid to those who cannot afford a private attorney.

The organization cites income inequality as “one of four critical clusters of information measuring disadvantage and deprivation” both in New Jersey and society.

The PRI has addressed three of the information clusters in previous reports: poverty in 2014, the real cost of living in 2013, and income inequality, in 2012.  The current report is on income inequality as well.

But the fourth "cluster," wealth inequality, “remains unaddressed to date because the specific information is far less accessible,” according to the overview. 

The 36-page LSNJ report released last month relies on available data from the US Census and asks readers to offer comments and ideas in response to the report and provides an email for that purpose: [email protected]

The report is not intended to suggest “particular remedial strategies,” but does conclude with a few observations.

"What is to be done?" asks the report.

"We would do well to remember the observation that any aproach or program that has the effect of reducing poverty will tend to diminish inequality as well."

"It is worthwhile to revisit the review of anti-poverty programs and recommendations offered in LSNJ PRI's Poverty Benchmarks series," continues the report.  "Building on program successes and expanding their search, and adjusting such aproaches where weaknesses appear, constitutes a solid first step in reducing inequality."

All of the PRI reports are available on the agency's website.

Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.