Study shows income inequality affects people more as they age

Abraham Tesfahun
In this photo taken on Friday, May 1, 2015, Abraham Tesfahun, 21, who works in food service at the Senate and makes $10.70 an hour, poses for a portrait at the Capitol in Washington. Income inequality is more than a political sound bite to workers in the Capitol. It's their life. Many of the Capitol's food servers, who make the meals, bus the tables and run the cash registers in the restaurants and carryouts that serve lawmakers, earn less than $11 an hour. Some make nothing at all when Congress is in recess. (AP Photo/Jacquelyn Martin)

KIMT News 3- We have all hear the terms “income inequality”. It has become a hot button issue with many politicians during this campaign season.

The wealth gap is the difference in income between the wealthiest people in the country and the rest of the economic classes. Sara Carlsson, a Financial Advisor for Edward Jones says the issue of Income Inequality came to the limelight during the Great Recession, but has been a problem for over a decade.

The study was done by economists at the Federal Reserve Bank in New York. They found that the average worker sees a 38% increase in earning from the ages 25-60. The lower 20 percentile see a decline in earnings, and the 1% see a fifteen-fold increase.

They explain that a lot of that has to do with the economic shocks people face through out the year. Whether it be an emergency, an unexpected salary decrease. or even an increase; everyone sees these chocks throughout the year.

However, the study shows those negative shocks can accumulate and be hard to overcome, and for the lower percentile, the large shocks can become permanent, but Carlsson says there are ways to help yourself.

“We want people educate themselves on how to manage their own finances,” says Carlsson. “families need to come up with a plan to increase their emergency funds to help bounce back from these economic shocks.”

Carlsson says one way to be able to do that is have automated withdrawals come out of your checks each week into an account.

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