Well, it’s official: the American dream is dying. For some time now, the rich in the United States have been getting richer, and the poor are seeing smaller and smaller percentages of the nation’s overall wealth. Now, the numbers have become extreme.
It is an inconvenient truth to point out that wealth disparity in America is the worst it has been in over a decade. By all standards, the economy is booming: Gross Domestic Product (GDP) has been on the rise for 10 years, unemployment is minimal, and the median household income hit an all-time high in 2018. With all of these surges to our national economy, and with median incomes increasing, it stands to reason that there would be a more even distribution of wealth. A rising tide raises all ships, right?
Unfortunately, this is not the case. According to a study by G. William Domhoff, 36.7% of the United States’ privately-held wealth was owned by just 1% of the population in 2013, and 52.2% of privately-held wealth was owned by the next 19%. This means that in 2013, 88.9% of all privately-held wealth was possessed by the top 20%, while only 11.1% was held by the remaining 80% of the population. These figures can perhaps be better represented in the form of a map, as shown in the graphic above.
Privately-held wealth refers to net worth per household, including real estate. Since a lower-income household is likely to have a greater percentage of their net worth tied up in the value of their homes, the upper-class actually holds even higher percentages of wealth when real estate is not a factor–meaning 42.8% is held by 1% of the population.
These numbers are also indicative of a worsening trend: in 1989, the bottom 80% owned 18.7% of private wealth in America–7.6% more than today. Since then, the rich have continued to consolidate more and more wealth, leaving an ever-decreasing percentage of the total wealth in the economy to be divided amongst the middle and lower classes.
A convenient way to calculate wealth disparity is by using the Gini Index, which generates a coefficient based on the wealth distribution of a population, where 0 would mean all members share the same amount of wealth, and 100 would mean one person owns all wealth. In 2007, The United States had a Gini Coefficient of 45 in terms of household income—up from 40.8 in 1997, according to an analysis by the CIA.
Income inequality seems to have a regional bias as well. According to recent studies by the U.S. Census Bureau, several areas–including my home state of Arkansas, along with California, Texas, Virginia, Alabama, Kansas, Nebraska, New Hampshire, and New Mexico– experienced particularly high increases in the amount of income inequality among their citizens. Disproportionate increases in inequality for these regions could be due to faltering agricultural outputs or fewer minimum wage increases. Additionally, a thriving economy and low unemployment rates primarily benefit shareholders, whose dividends are based on the value of the company. Unless wages for employees are deliberately raised, then workers rarely have the benefits of economic growth incorporated into their incomes.
But what about the median income? In 2018, the median household income in the United States was measured at approximately $62,000, the highest ever recorded, even after adjusting for inflation and the comparative values of goods and services. It is undeniable that this is good for American workers. However, it is a bit misleading. The increase in median income is more likely due to an overall increase in labor participation, since the average pay for full-time workers actually decreased in 2017, according to the New York Times.
But why do I say the American dream is dead? Ideally, everyone should have the chance to work hard and succeed. However, with a constantly shrinking ratio of wealth available to the lower and middle classes, this is not the case. If 80% of the population is competing over barely 11% of the nation’s private financial wealth while the top 20%divide up the rest, how many people really have the chance to succeed?
Even established members of the workforce are not seeing the benefits of today’s strong economy: according to Domhoff’s research, between 1990 and 2005, the average pay for full time production workers increased by 4.3%, whereas the average pay for CEOs increased by nearly 300% after adjusting for inflation.
It’s true, today’s economy is strong. We have successfully recovered from the Great Recession, and we are now observing unprecedented levels of economic success—for those whose incomes are tied to corporate success, that is. Our booming economy has left most American laborers in the dirt, fighting over the few scraps that fall from the table. The crucial part of trickle-down economics is that at some point, it has to trickle down. Americans have been waiting on that trickle since the 1980s, and while some years have shown income increases, overall we are seeing fewer and fewer returns for the work we put in.
Despite the Trump administration’s claims that the war on poverty is “largely over and a success,” reports on current poverty rates have not decreased by any significant amount—and that is only abiding by the loose Federal definition of poverty, which is $25,700 for a family of four—a shockingly low amount.
If the top percentiles continue to amass ever-increasing financial wealth, then the lowest percentiles will be left with next to nothing.
There is no perfect solution to income inequality—it’s unlikely that either side of the political spectrum has all the answers. However, one truth remains: something must be done. Every worker deserves to be fairly compensated for the value they provide to society, and no longer can we afford to leave anyone behind.