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Even as Economy Rebounds, Income Inequality Festers

CBS MoneyWatch

Whatever growth in GDP or reductions in unemployment, most Americans think the economy stinks. According to a new CBS poll, more than 60 percent of people polled rate the economy as "bad." And well they should: For the vast majority of Americans, economic gains during the recovery have almost entirely gone to the people at the very top.

The "Great Recession" officially ended in June 2009. That's when the economy was judged to have stopped shrinking and started growing again. The Dow Jones industrial average and the broader S&P 500 are hovering near record highs. At the same time, income inequality has surged. Economists Emmanuel Saez and Thomas Piketty found that from 2009 to 2011, 121 percent of income gains went to the richest 1 percent of the population. The 99 percent beneath that select group saw their incomes fall by about a half a percent over the same period.

The trend seems all the more maddening given that it takes place against a backdrop of steeply rising employee productivity. Even as workers function more efficiently, in other words, they are rewarded less.

The reasons for the yawning inequality are varied but ultimately rooted in policy -- and politics. In his economic address Wednesday, President Barack Obama described a "winner-take-all" economy in which the gains of the top 1 percent has quadrupled while the rest of the country has barely budged. [...]

Obama called for hiking the minimum wage in his speech Wednesday. While he's likely to run into the same buzzsaw of opposition not only from the GOP but from some members of his own party, there are measures he can take unilaterally. Amy Traub, an economic policy analyst at think-tank Demos, said Obama could, without any interference from Congress, set wage floors for hundreds of thousands of workers employed by government contractors.