The gap between the rich and poor in Arkansas is growing. A new report by Arkansas Advocates for Children and Families (AACF) says increasing inequality in Arkansas is holding back economic growth, damaging the democratic process, and keeping many low-income and minority families stuck in poverty. But it’s a problem that has solutions, the group says.

According to the report, “Income Inequality is Hurting Arkansas,” the growing gap between the income of the wealthy and the poor in Arkansas is bad for economic growth.

• The top five percent of Arkansas earners make ten times as much as the bottom 20 percent of households.
• From the late 1970s to the late 2000s, the most well-off Arkansans saw their incomes grow almost twice as fast as the poorest.
• The typical Arkansan’s income has stagnated; in 2012 the median family income was only about five cents an hour above recession levels.

“If low- and middle-income families aren’t making enough money to spend on goods and services, the economy slows down as a result,” says Rich Huddleston, executive director of AACF. “What we’re seeing is huge gains for those who are already pretty wealthy while low-income families are seeing their incomes slowly inch up or even stagnate. And a lot of this is the result of policy decisions. Capital gains tax cuts, like those passed last session, favor wealthy Arkansans.”

Eleanor Wheeler, senior policy analyst at AACF and author of the report, says inequality will always exist to some degree.

“It becomes an issue when we reach a level so extreme that poorer families don’t earn enough to put food on the table,” Wheeler says. “The low- and middle-income earners in Arkansas whose pay has leveled off are the same people who make purchases that drive the economy. Making sure those near the bottom have enough to spend on goods and services will benefit the economy and contribute to shared prosperity for Arkansans.”

Wheeler says there are some measures the state can take to reduce income inequality, including:

• enacting a state earned income tax credit;
• making sure everyone pays taxes based on their ability to pay;
• investing in programs, such as education, that increase mobility;
• raising the minimum wage; and
• strengthening the unemployment insurance system.