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Business leaders concerned by income gap

WASHINGTON — Income inequality will remain a persistent problem, despite brighter prospects for US companies globally, according to an annual survey of Harvard Business School alumni.

Fifty-eight percent of the respondents said the US economy would either become more competitive or at least hold its ground against other countries over the next three years. In 2011, just 29 percent felt that way.

But only about a third said they expected companies to be able to increase pay and benefits. The wealth disparity alarmed many of the surveyed executives, with 45 percent saying that rising poverty levels could hurt their businesses. The respondents said they worry about the growing concentration of wealth among a sliver of the population, but they appear uncertain about how to reduce inequality.


Some companies have tried to address the problem with pay raises. Others fear resistance from shareholders, whose holdings might lose value if higher salaries raise costs and erode profits.

‘‘There is a gap between ‘I don’t think the system is working’ and ‘I don’t know what to do to fix it,’ ’’ said Jan Rivkin, a professor of business administration at Harvard and coauthor of the survey report.

The respondents suggested that greater economic inequality could ultimately reduce demand for their products, hurt social stability, make it harder to acquire skilled workers, and provoke a backlash against successful companies.

The findings come at a pivotal moment for the global economy, with the United States outshining most other industrialized nations. With its 5.1 percent unemployment rate and steady job growth since early 2014, ‘‘the US economy is the most robust economy in the world,’’ said Gregory Daco, at the consultancy Oxford Economics.

China, the second-largest economy, has suffered a sharp slowdown. Other emerging economies, such as Brazil’s, are struggling. And Europe remains mired in high unemployment and sluggish growth.


Rivkin noted that faster product cycles mean companies must be closer to their domestic customers and that wage inflation in emerging nations has increased operating costs.

US incomes have yet to fully rebound more than six years into the recovery from the Great Recession. The median household income was $55,132 in June, 2.7 percent below its prerecession level in December 2007, according to Sentier Research.

Finding ways to narrow inequality, such as increased investment in education, should be a priority, according to the 2,716 Harvard alumni in the survey. Asked to choose among priorities, two-thirds selected problems related to the wealth gap: income inequality, middle-class stagnation, economic mobility, or poverty. A third said the focus should be on improving overall economic growth.