The Trillion Dollar Income Shift, Part 1 (Wealth Distribution Inequality)

Lasher

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Fri Mar-23-07 08:33 AM
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The Trillion Dollar Income Shift, Part 1 (Wealth Distribution Inequality)

For three decades a �Great Leveling� of incomes between classes in America occurred as the standard of living rose for tens of millions of American workers and their families from 1942 to the mid-1970s. American working class families received a share of record gains in productivity. Real wages rose. Guaranteed retirement benefits�private pensions and social security�were greatly expanded. Health insurance plans were negotiated. Medicare was added for the aged. K-12 public education was truly free and public colleges and universities nearly so. Unions represented 25%-35% of the work force, and typically 60% and more in key strategic sectors like construction, manufacturing, and transport. The tax burden for workers rose relatively slowly and corporations and the wealthy still paid a fair share.

Then, after three decades, the hourglass of history was inverted. Stood on its head. The �Great Leveling� of incomes became, after a brief interregnum from 1974-1978, a �Great Reversal�. From the mid-1970s until the present a widening income gap began to open up, as it once had in the decade leading up to the Great Depression after 1929. Income inequality grew as income shifted from working class families to the wealthiest households and corporations. From the early 1980s on income inequality widened, deepened, and accelerated until today well over $1 trillion in income is being transferred every year from the roughly 90 million working class families in America to corporations and the wealthiest non-working class households.

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There are approximately 114 million households in the U.S. today. The wealthiest 1% make up 1.4 million households. They now receive between 19%-21.5% of the annual Gross Domestic Product (GDP) of the United States, depending on the source cited. That�s up from 8% in 1980. Today�s 19%-21.5% also represents a nearly full recovery of the roughly 22% share of national income the top 1% received in 1928 just prior to the stock market crash of 1929, the depression of the 1930s, and the �Great Leveling� of class incomes that followed. That same 1% today also hold more than 35% of all assets and wealth of the country�about $17 trillion. They own 51% of all stocks and 70% of all bonds, own homes worth $3 million and have a net worth of $6 million. The bottom 50% of all households, nearly 60 million families�all working class�in comparison own only 2.5% of the country�s total assets and wealth.

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The authors� data also show that the incomes of the wealthy 1% have recovered from the 2001 recession, the economic shock of 9-11, the dot.com bust of 2000-02, and other negative developments earlier this decade. Since 2003 the incomes of the wealthiest 1% households are once again back on their long term expansion track that began in 1978-1982. In stark contrast, the 90 million working class families have not recovered at all from the 2001 recession and other economic effects, but have steadily fallen behind from 2001 through 2006. This dual fact is the defining economic characteristic and legacy of the George W. Bush presidency.

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