1 out of 3 American children are worse off than their parents were at their age ... bottom 20% lost 2.5% in income over 20 years

Rich getting richer: Campaign issue?Studies show that the rich are getting a lot richer, the poor a little poorer. The middle class is slipping. | By David R. Francis | columnist | from the April 14, 2008 edition

The latest study of income inequality in the United States, released last week, confirms that trend. It finds that since the late 1990s, despite several years of reasonable economic growth, the bottom 20 percent of families actually lost 2.5 percent in their average income by 2005, while the top 20 percent of American households enjoyed a 9 percent rise. Those in the middle fifth got a 1 percent hike in inflation-adjusted incomes.
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... In 37 states, from the late 1980s to the middle of the current decade, the richest fifth of families got an average $36,300 boost in their annual income while the poorest fifth got just $1,600. In terms of purchasing power, the annual income of the poorest families increased only $93 by the end of the period (To see the study, visit www.cbpp.org.)

Another study, by the Congressional Budget Office, using tax data, calculates that the share of national after-tax income going to the top 1 percent of households more than doubled, from 7.5 percent in 1979 to 15.6 percent in 2005. In 2005 alone, the $180,000 average income gain for these rich households was more than three times the average middle-income household's total income.

An academic look at increasing income polarization, written by economists Emmanuel Saez of the University of California, Berkeley, and Thomas Piketty of the Paris School of Economics, found that average incomes of the highest-earning 1 percent grew 11 percent year-over-year between 2002 and 2006. The bottom 99 percent saw their incomes grow on average just 0.9 percent annually.
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Conservatives tend to think the economic system is fair, rewarding the deserving properly. Americans have generally been tolerant of unequal outcomes, since most believe opportunities to get ahead are abundant and that hard work and skill are well rewarded, as Isabel Sawhill, of Washington's Brookings Institution notes.

But she questions these assumptions, citing a Brookings study released in February that found that 1 out of 3 American children are worse off than their parents were at their age. It also noted that intergenerational economic mobility in the US is worse than in Canada and the Scandinavian countries, and even lower than in France and Germany with their aristocratic heritages. ...