I’ve written at length about socioeconomic inequality in America, and this will be my last of three posts on the subject, at least for now. But what does this inequality I’ve been discussing look like? How and where has it grown, and what are the trends for the future?
Mother Jones has posted a series of eye-opening charts that highlight the extent to which the gap between rich and poor has grown, especially in terms of income. I’ve shared them below. You can check out similar graphics that deal with the jobless recovery, a breakdown of the 1%, and taxation of the very wealthy.
Note: The 2007 data (the most current) doesn't reflect the impact of the housing market crash. In 2007, the bottom 60% of Americans had 65% of their net worth tied up in their homes. The top 1%, in contrast, had just 10%. The housing crisis has no doubt further swelled the share of total net worth held by the super-rich. The super-rich have grabbed the bulk of the past three decades' gains.
A Harvard business prof and a behavioral economist recently asked more than 5,000 Americans how they thought wealth is distributed in the United States. Most thought that it’s more balanced than it actually is. Asked to choose their ideal distribution of wealth, 92% picked one that was even more equitable.
Why Washington is closer to Wall Street than Main Street.
|Rep. Darrell Issa (R-Calif.)
|Rep. Jane Harman (D-Calif.)
|Rep. Vern Buchanan (R-Fla.)
|Sen. John Kerry (D-Mass.)
|Rep. Jared Polis (D-Colo.)
|Sen. Mark Warner (D-Va.)
|Sen. Herb Kohl (D-Wisc.)
|Rep. Michael McCaul (R-Texas)
|Sen. Jay Rockefeller (D-W.Va.)
|Sen. Dianne Feinstein (D-Calif.)
Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.
For the record, I’m well aware that MoJo is a leftist publication, lest I be accused of bias. But bear in mind that the data it presents is cited, and the majority of its references are relatively legitimate sources like academic studies and government agencies. I don’t concern myself with the slant of any particular periodical so long as it is providing valid evidence to back up its claims. You’re more than free to share conflicting conclusions with me if they meet this criterion.
In any case, this and other data clearly show that inequality is becoming an entrenched problem. The majority of people within the top 1% income level – who have experienced exponential growth in their wealth – are hedge fund managers, corporate executives, and the heads of banking and finance institutions.
Concurrently, CEO salaries have grown in the triple digits while average wages have remained stagnant, despite an overall increase in worker productivity. The ratio between executive pay and that of the typical employee has widened just as tremendously as the ratio of wealth and income between richest Americans and everyone else.
The connection is obvious: the income bracket that is doing incredibly well is mostly made up of the same people who are giving themselves higher salaries at the expense of their workers. When a company makes higher profits, at least some of it could just as easily go to the employees who contributed to that success. But how many companies actually give their workforce even a fraction of the profits, or any sort of monetary bonus? How many people are seeing their real income (adjusted for inflation) rising in pace with the cost of living, which has increased markedly in healthcare, education, and rent?
I don’t care if any of this sounds socialist or Marxist: I am neither, and what I’m saying is based on my own analysis of the data. I want this to be judged and discussed independently of whatever you’d label it.
Regardless of the ideological underpinning, I think it’s fair to ask why only a small number of people should take in the bulk of this country’s enormous wealth. Whether or not these individuals are job creators or ingenious innovators, it’s the average American that’s helping their business thrive. Visionaries or not, surely they can afford to give themselves a bigger share of the profit but still leave something left over for the rest of their workforce.
But rather then view their company as a cooperative venture involving others, most of these execs have developed a hierarchical and self-entitled approach to the way they manage their workforce. They enrich themselves with millions of dollars – usually at the behest of company shareholders – even while they slash jobs, cut benefits, and freeze raises – ostensibly because their company cannot afford it. For a similar reason, they rally against raising the minimum wage, or even against the currently inadequate rate – as if concentrating profits to a handful of top-level managers and board members is any more efficient.
It’s these sorts of business practices, bolstered by our culture of greed and self-entitlement, which are contributing to our current economic malaise. I won’t discount the role of our government, or of those people who sponge off the system. But system is too complex to be affected only by inept politicians and social parasites. Clearly, we need to look harder at the way every component of our economic and political system operates.
A country in which only a relative few prosper is not going to endure for long. You can’t sustain economic growth when most of the nation is being financially squeezed, and most of the consumption that drives our economy is limited to a small percentage of people who mostly rely on niche goods. Historically, this nation was at its most prosperous when equality of opportunity was at its highest and most widespread level, leading to better conditions for most people. Putting aside the peripheral rags-to-riches stories, the average person can’t prosper if they’re not being paid a living wage, or if they don’t have access to sustainable and fulfilling jobs. The society highlighted in the charts above is not a prosperous one.
Do you agree or disagree? Any alternative or conflicting takes on this, or better yet opposing data? Please don’t hesitate to share. I haven’t made up my mind on the way we address this problem – hence why I didn’t even get into it – and I’m pliable to any decent argument or evidence that comes my way.