From Tops to Pyramids: Shifting Income Distribution

In South Dakota, 46% of voters are registered as Republicans, 34% are registered as Democrats, and roughly 16% are independent. And despite a strongly conservative ideology in the state, many were shocked when a 2014 ballot initiative to increase the minimum wage was successful. 55% of voters supported the proposed increase to $8.50 / hour. This gives South Dakota one of the highest minimum wages in the country. Only California, Connecticut, Oregon, Vermont, Washington, and the District of Columbia have higher minimum wages. Why would a conservative state like South Dakota support an increase in the minimum wage?

I feel the answer lies in the shifting socioeconomic status of many Americans. For a long time, we have heard about the “hollowing out” of the middle class, but perhaps we haven’t been particularly sure how much it is myth or reality. It is much more challenging to observe in the Dakotas, because we don’t have the same economy and lifestyle as our urban neighbors on the coasts. If you drive through any of the cities in the Dakotas, you would be convinced that the middle class is alive and well. And I think that is true, in the Dakotas. But if you have had an opportunity to live in a major city, you will experience how disorienting our economic system can be. There is extreme wealth, and extreme poverty, and services that cater to people on both ends of the spectrum. However, it is very challenging to be middle class in these environments, and to live with no support in the face of high rents, unsubsidized transportation, and high taxes at every government level.

The issue at hand is income in the United States used to have a unique distribution to it. Imagine a spinning top, the kind of top that spins on a tiny point but has a bulbous body on top. If you placed that top upside down so the point was sticking into the air, you would have a fairly good representation of what income distribution used to look like preceding World War II. Think of the volume of the top with respect to the height as a representation of incomes. Most of the volume or incomes were around the bulbous body on the bottom, and only a few were really high at the tiny point where the top would spin. With most of the incomes clustered around each other, people had a shared sense of what it is like to be American.

Now in recent decades, the shape of that top has disappeared. Instead, income distributions have taken on the shape more similar to a pyramid that has stretched out the bulbous body of the top, and pushed some incomes lower, and some incomes higher. The effect is a more disconnected vision of what it is to be American. For those who saw their incomes pushed higher, they are content with the system, and for those who saw incomes get pushed lower, there has been disenchantment. Now there is disagreement over what is fair, and less of a consensus on what is ordinarily normal or even affordable.

What has caused these shifts is subject to a lot of study and speculation. A heavy influx of college educated people into the economy following WWII is likely one reason, causing income disparity between those with college degrees and those without. This would also suggest that the “bulbous top” shaped income distribution could have been an anomaly, which largely resulted from the prosperity that immediately followed WWII. Income inequality is not something new in the United States. It was well documented and discussed during the Gilded Age from 1870-1900 and again, a hot topic in the 1920s.

These sociological shifts are likely the reason even a conservative state like South Dakota would adopt a higher minimum wage. While conservative ideology is a dominant force in the state, still many with those ideals may have been pushed downward on the pyramid, and are trying to create a back-stop from being pushed further.,_Initiated_Measure_18_(2014)