Great Divergence Definition

The higher income households in the United States are gradually earning far more than those who earn middle or lower income. Although the gap between incomes was relatively lower between the 1950s-1980s, it has significantly increased since the 1970s; this disparity is otherwise known as the “Great Divergence”.
A similar occurrence to the Great Divergence took place during the Gilded Age to around 1937. The next ten years showed a decrease in the disproportion, partially caused by the New Deal taxation, the strengthening of unions, and the regulation of the National War Labor Board during World War II. During this era, the lower and middle class started to earn more while the higher class earned less. There was no foreign competition for American manufacturing, the U.S. workers were skillful, and trade unions were stronger around this era, keeping the income generally higher than before. It wasn’t until 2011 when the Great Divergence became a serious issue in America, causing the middle class earners to stay at a constant lower proportion to that of the higher and lower classes. As a result of this growing issue, the Middle Class Working Families Task Force and the Occupy movement were formed. The Middle Class Working Families Task Force is a Barack Obama administration …show more content…
While the middle class earners received 62% from labor income and 4% from capital income. From 2007-2009, the share of pre-tax income earned by the higher 1% fell from 18.7% in 2007 to 13.4% in 2009, while the middle class had an increase in the share of pre-tax income, which caused the Great Recession of 2007-2009. After the Recession, the tables were turned on the top 10% of income earners. The share of pre-tax income for the higher class went from 13.3% in 2009 to an astonishing 50.4% in 2012, the highest percentage since