Title: Income Inequality, and Its Cost - The New York Times
Headings: Income Inequality, and Its Cost
Today in Business
Income Inequality, and Its Cost

Content: If a C.E.O.'s salary is going through the roof and workers are getting pay cuts, what will happen?" he said. " Workers can't outright reject the offer — they need to work — but they can reject it by working less hard and not caring about the quality of what they are producing. Then the whole efficiency of the firm is affected." THE effects of income inequality aren't entirely negative. Without some inequality, there would be little economic incentive to earn more. And some researchers, particularly advocates of supply-side theories, predict that as the rich get richer, their increased wealth will be used for greater savings and investment, thereby bolstering growth. The latest data on the American economy, though, do not seem to support this prediction. Savings among top income earners have actually declined. According to the Federal Reserve's latest Survey of Consumer Finance, the percentage of families in the top 10 percent by income that saved anything at all dropped to 80.6 percent in 2004 from 84.3 percent in 2001.