Tyler Schipper, associate professor of economics at the University of St. Thomas, recently spoke with Fortune about the widening gap between wealthy and lower-income Americans in what economists call a “K-shaped economy.” He explained that while income inequality has existed for decades, recent inflation, tariffs and labor market shifts have deepened the divide, leaving more middle-class households feeling the strain.
From the article:
It all began with an anonymous Twitter handle named “Ivan the K.” The self-appointed “Lead Independent Director of Finance Twitter” had a dark theory in the depths of the pandemic. In 2020, they asked the universe, “Why is no one talking about a K recovery?” since there was much discussion at that time about an economic bounceback in the shape of either a U, an L, or, most bullish of all, a V. “Some things will bounce back,” Ivan wrote, “some will not recover. Think about it.”
Economists seem to have thunk on it and agreed: The K is real. It bears similarities to another saying, invented nearly 200 years earlier by the great English romantic poet Percy Bysshe Shelley: “The rich get richer, the poor get poorer.” ...
The concept of a bifurcated economy has been baked into American society longer than even the days of Reagan, according to Tyler Schipper, associate professor of economics at the University of St. Thomas.
“There’s this underlying thing that has been true for decades and decades and decades,” Schipper told Fortune. “Number one, lower income households always struggle more in the economy. They tend to be more impacted by price changes because they’re spending a higher percentage of their income.
“And second, that it tends to be that after each recession, lower income workers fall further behind in the income distribution,” he added.
Today, conversations around the shape of the American economy are more urgent because more of the middle class – and those making about $100,000 per year – are getting pushed into the lower half of the K, Schipper said. ...
