The Virginian-Pilot
                             THE VIRGINIAN-PILOT 
              Copyright (c) 1996, Landmark Communications, Inc.

DATE: Thursday, March 21, 1996               TAG: 9603210394
SECTION: BUSINESS                 PAGE: D2   EDITION: FINAL 
SOURCE: BY STUART SILVERSTEIN, LOS ANGELES TIMES 
                                             LENGTH: Medium:   77 lines

GAP BETWEEN THE RICH AND POOR IS WIDENING IN U.S., STUDY SHOWS

The income gap between the richest and poorest American families - a politically charged issue that figures to weigh heavily in this year's elections - kept widening during the early 1990s despite a recovering economy, a major new study reported Tuesday.

The study, called the first comprehensive look at patterns of income distribution in the 1990s, said that the people who pulled ahead economically generally were older, highly educated and members of families headed by married couples.

Those who lost ground tended to be members of single-parent families - putting increasing numbers of children and young adults in or near poverty.

The report found that the breaking point between economic winners and losers from 1989 to 1993 ran through the middle of the American population.

The bottom 50 percent of Americans saw their standard of living slip during the four-year period as inflation outpaced their income gains, while those in the upper 50 percent of the income spectrum advanced economically.

Rand Corp. labor economist Lynn A. Karoly, author of the study, called the results a double dose of bad news, reflecting both a growing income gap between rich and poor and worsened living standards for millions of Americans.

``We might have been willing to live with more inequality if everyone was better off, but that's not the case,'' she said.

Karoly's report provides an update on previous, widely publicized research that spotted a national pattern of growing economic inequality during the 1970s and 1980s. In an election year in which the related issues of stagnant wages and job insecurity have been potent themes, the Rand report is likely to spur further debate.

Karoly attributes the growing income gap and economic losses among the less affluent in large part to the rise in one-parent families and related social issues.

She said topics now in the political spotlight - including corporate layoffs, global competition and declining union strength - likely are playing an important role in holding down many workers' wages, but are far from the only reasons for the growing income gaps among families.

Relying on recent U.S. census data, Karoly found that the median income among families - after discounting the impact of inflation - fell from $29,863 in 1989 to $27,147 in 1993. The decline, she said, was somewhat exaggerated by the shrinking size of American families.

Still, even after making a statistical adjustment to account for the change in family size, Karoly found Americans slipping economically over the four-year period. Her research showed that the median American income was 3.25 times the poverty level in 1989, but slipped to three times the poverty level in 1993.

More dramatic was the expansion of the gap between the most- and least-affluent Americans. By one comparison, a typical American in the top fifth of the economic spectrum drew an income in 1993 that was nearly 10 times higher than an equivalent person in the bottom fifth of the population. That ratio was 12.4 percent wider than in 1989.

Other labor economists who specialize on income and wage issues were divided on Karoly's study. Syracuse University's Richard V. Burkhauser, while praising much of Karoly's research, said the slippage in the standard of living reported for many Americans may be due to inaccurate government measures of inflation, rather than genuine economic decline.

Moreover, he said, comparing family incomes over the four year-period is misleading because 1989 was a boom year, but 1993 was a time of sluggish economic recovery. ``The telling question will be what happens between 1989 and 1996 or whenever we reach the end of this economic cycle,'' Burkhauser said.

Karoly responded that 1993 was not as strong a year economically as 1989, but the years were comparable enough to show a meaningful income-gap pattern.

She also said that the latest census statistics - figures for 1994 that have not been fully evaluated - provide some hope that the income gap may have leveled off that year. by CNB