If you’ve been reading my previous posts, you know that income inequality is increasing in South Dakota and the nation, in general.
Income is the money people receive from work, government benefits or investments.
But that doesn’t tell the whole story.
If you examine the wealth, or net worth, of Americans, the picture of disparity in this country actually gets even worse.
New York University professor Edward N. Wolff recently found that, “(From 1983-2010), the largest gains in relative terms were made by the wealthiest households. The top one percent saw their average wealth (in 2010 dollars) rise by almost seven million dollars or by 71 percent. The remaining part of the top quintile experienced increases from 52 to 101 percent and the fourth quintile by 21 percent, while the middle quintile lost 18 percent and the poorest 40 percent lost 270 percent! By 2010, the average wealth of the bottom 40 percent had fallen to -$10,600.”
You can read his most recent paper here.
Bruce Watson at Daily Finance recently summed up Wolff’s research:
According to Wolff’s calculations, the median net worth of American households has now reached a 43-year low of $57,000 (in 2010 dollars).
On the surface, the fact that American households are poorer and less stable than they were in 1969 is shocking. And the deeper one digs, the more it becomes clear that the situation is even worse than those headline numbers suggest.
The median, after all, is the midpoint, which means that there are an equal number of households above and below that line. And we don’t have to go far below that line to find troubling data.
According to Wolff, between 1983 and 2010, the percentage of households with less than $10,000 in assets (in constant 1995 dollars) rose from 29.7 percent to 37.1 percent. And yes, that “less than $10,000” figure includes the many households with no assets at all, or “negative assets” — what we in the non-academic world just call debt.
Where did all the money go? Over the same period, the richest 1 percent of households increased their average wealth by 71 percent.
Here’s another way to gauge the shift in wealth: From 1983 to 2010 the share of total wealth held by the richest 10% of American households increased from 68.2 percent to 76.7 percent. All the rest of Americans lost ground.
What does this mean for the vast majority of us who are watching our incomes and overall wealth decline?
It means that the brightest future for many of us may be getting a job serving the rich — a pilot, publicist or chauffeur, for example. Maybe you’d like to challenge yourself by being a concierge and hiring an elephant for an extravagant wedding.
The alternative could be competing with people around the globe for increasingly stagnating wages.
Here is the synopsis:
The U.S. can no longer fulfill the dreams of Wall Street, the Pentagon, and the Middle Class. At least one dream must die. Despite partisan differences, both political parties have agreed to sacrifice the people. An economic recovery will eventually create more jobs, predicts Faux, but most will no longer pay a middle class salary. On our present track, real incomes by 2024 will be dramatically lower than they are today.
Our much-touted service economy will become a “servant” economy. Debt-laden 20-something college graduates will become 30- and 40-somethings, still juggling dead-end jobs. Personal dignity will go the way of decent pay. Life at work for most Americans will return to what it was before the New Deal – insecure, underpaid and subject to the daily humiliations of an economy managed to benefit of the rich and powerful.
The core problem, argues Faux, is not that we don’t know what to do. The main elements of a high wage strategy — re-directing capital from short-term speculation to long term investment and sharing the returns to rising productivity more broadly — are clear. But the influence of the richest “one percent” has blocked government’s capacity to shape our common future, no matter which party is in power.
Does his prediction sound like the bright future you want for yourself and your children?
If not, it’s time you start thinking about how our economy can be changed to serve common interests, rather than just those of the elite.
More on this in the future …