During the Progressive Era and the Great Depression, the states led the fight against economic challenges. According to new research from West Virginia University, it is likely that the U.S. will once again have to rely on the states to address today’s massive gap between the rich and the poor.William Franko, assistant professor in the Department of Political Science and co-author of “The New Economic Populism: How States Respond to Economic Inequality,” argues that the U.S. government’s failure to address rising income inequality should not be surprising since federal inaction in the face of emerging economic problems is the norm in American history.
“Populism became a much more prominent term after the 2016 elections,” Franko said. “What we are calling the new economic populism is the concept that people are becoming more supportive of the idea that government intervention is needed to alleviate rising income disparities in the U.S.”
Franko and co-author Christopher Witko, an associate professor of political science at the University of South Carolina, received the Virginia Gray Best Book Award for the best political science book in the nation at the 2018 State Politics and Policy Conference.
“(Franko and Witko’s) book on state efforts to address the negative consequences of the 21st century economy on Americans in the face of federal inaction is both timely and important, and the Virginia Gray prize underscores its value to political science scholarship,” said John Kilwein, chair of the Department of Political Science.
According to Franko, in recent decades scholars have not believed that the public was aware of discrepancies in income distribution.
“One of our chapters focuses on the question of whether or not the public is cognizant of the changes of income inequality in general, and we found is that for the most part the public is aware of changes in income inequality in their own states,” Franko said.
By asking the question, “Do you agree or disagree with the statement that the rich are getting richer and the poor are getting poorer?”, the authors created an aggregate measure of income distribution called the public “Awareness of Inequality.”
“Essentially, the measure showed the percentage of residents in the state that believe the gap between the rich and the poor is growing,” Franko said. “Overall averages are almost always above 50 percent of people in agreement with that statement.”
While the Franko and Witko argue that states are better positioned to address rising income inequality, they indicate that the federal government would be the most effective in addressing the issue of income inequality.
“Our findings imply that economists and political scientists should think more carefully about how the states are reacting to income inequality because of the fact that the federal government hasn’t done anything,” Franko said. “In fact, what we have seen in recent years is that the federal government has made things worse in terms of inequality.”
Franko suggests that there are two main ways that the federal government has made situations worse in terms of income inequality.
“One way is explicitly creating policies that are benefiting the rich and creating more inequality,” Franko said. “A second way is when the federal government does nothing at all. Growing polarization is leading to gridlock in Congress and the policies that are put in place, such as the federal minimum wage are becoming less progressive because of inaction.”
According to Franko, the value of the minimum wage is declining over time due to government inaction relating to federal minimum wage policy.
“Another interesting thing that we found is the difference between the support for the federal minimum wage and the income tax credit,” Franko said. “Across the board, people are extremely supportive of increasing the minimum wage. However, when it comes to the earned income tax credit, which some people argue might be more effective in reducing income inequality than the minimum wage, people are not very familiar with it.”