“...that dream of a land in which life
should be better and richer and fuller for everyone, with opportunity for each
according to ability or achievement. It is a difficult dream for the European
upper classes to interpret adequately, and too many of us ourselves have grown
weary and mistrustful of it. It is not a dream of motor cars and high wages
merely, but a dream of social order in which each man and each woman shall be
able to attain to the fullest stature of which they are innately capable, and
be recognized by others for what they are, regardless of the fortuitous
circumstances of birth or position.”
- James Truslow Adams,
The Epic of America (1931)
The
American Dream has been defined many ways by writers of both poetic and prosaic
bent, but its essentials tend to involve life, liberty and the pursuit of
happiness (or property, depending on your source).
The
Declaration of Independence, upon which an entire nation was radically brought
into existence, asserts that not only are all men created equal but that this
is a “self-evident” truth. By this “unanimous Declaration of the thirteen
united States of America,” a contract was agreed to, that their union would be
founded on this principle. Thus, America was endowed with its dream at the
moment of its conception: the freedom to succeed.
The
United States has promoted a self-congratulating exceptionalism for decades,
waving its Declaration and Constitution in the faces of other sovereign nations
as if the latter had never considered such concepts. Our capital F “Freedom”
sets us apart from the rest of the world, as the political rhetoric has
repeated ad nauseam, no matter the freedoms enjoyed by democracies on almost
every continent. And yet our basic freedom, the freedom to succeed, America’s
contractual promise, has been shrinking for thirty years.
The
freedom to succeed transcends economic systems but it is most potently
expressed by capitalist gains. The ability to go “from rags to riches” is
ingrained in this nation’s ethos and there is nothing intrinsically immoral
about that goal. However, the current state of American inequality reveals a
very real and expanding gap between the rich and poor that betrays the
foundational endowment of this Union. When the freedom to succeed is denied
every citizen, their equality is equally denied.
Recently,
the Pew Research Center released a poll on what international citizens
consider the greatest threat to the planet. Conducted between March 17 and June
5 of this year, the survey received answers from 48,643 respondents in 44
countries. In the U.S. and Europe, the growing gap between the rich and the
poor was overwhelmingly considered the greatest danger to world prosperity.
Over a quarter of Americans ranked “Inequality” as number one, above Religious
& ethnic hatred, Pollution, Nuclear weapons and Infectious diseases.
This
is hardly startling news considering that the median net worth of American
households fell by 35 percent ($106,591 to $68,839) between
2005 and 2011, according to the U.S. Census Bureau. It is, however, disturbing
that inequality remains so prevalent five years after the Great Recession.
Capitalism
is not the problem. The problem is that we have let inequality advance in this
country so gradually that its obviousness is masked by its familiarity. Below,
I outline eight facts about inequality in America that every American should
know.
1) 400 Americans have more wealth than
half of all Americans combined.
This ratio has been verified by Politifact and former Labor Secretary Robert Reich. To put it into context, last
year the U.S. Census Bureau estimated that there were
over 316 million people living in the United States. That means 400 Americans
have more money than over 158 million of their fellow citizens. Their net worth
is over $2 trillion, which is approximate to the Gross
Domestic Product of Russia.
One
explanation for the vast discrepancy in wealth is the definition of “worth,”
which includes everything a person or household owns. This means savings and
property but also mortgages, bills and debt. Poorer households can owe so much
in debt that they possess a negative net worth.
2) America has the second-highest level
of income inequality, after Chile.
The Organization for Economic Cooperation and Development
studies thirty-four developed countries and ranks them both before and after
taxes and government transfers take effect (government transfers include Social
Security, income tax credit and unemployment insurance). Before taxes and
government transfers, America ranks tenth in income inequality. After taxes and
transfers, it ranks second. Whereas its developed peers reduce inequality
through government programs, the United States’ government exacerbates
it.
3) The current state of inequality can
be traced back to 1979.
After
the Stock Market Crash of 1929, the gap between the rich and the poor began to
narrow. For fifty years, wages differed between the upper- and working-classes,
but a robust middle-class took shape and there remained ample opportunity for
working-class individuals to ascend.
In his
book, “The Great Divergence,” journalist Timothy Noah traced today’s inequality
to the beginning of the 1980s and the widening gap between the middle- and
upper-classes. This gap was influenced by the following factors: the failure of American
schools to prepare students for new technology; poor immigration policies that
favor unskilled workers and drive down the price of already low-income labor;
federally-mandated minimum wage that has failed to keep pace with inflation;
and the decline of labor unions.
4) Non-union wages are also affected by
the decline of unions.
The Economic Policy Institute claims that 20
percent of the growth in the wage gap between high-school-educated and
college-educated men can be attributed to deunionization.
Between
1978 and 2011, union representation for blue-collar and high-school educated
workers declined by more than half. This has also diminished the “union wage
effect,” whereby the existence of unions (more than 40 percent of blue-collar
workers were union members in 1978) was enough to boost wages in non-union jobs
- in high school graduates by as much as 8.2 percent. Not only did unions
protect lower- and middle-class workers from unfair wages, they also
established norms and practices that were then adopted by non-union employers.
Two prime examples are employee pensions and healthcare.
Today,
about 13 percent of workers belong to unions, which has reduced their
bargaining power and influence.
5) There is less opportunity for
intergenerational mobility.
In December 2011, President Obama spoke at Osawatomie High School in Kansas. He was very
clear about the prospects of the poor in today’s United States:
“[O]ver the last few decades, the rungs
on the ladder of opportunity have grown farther and farther apart, and the
middle class has shrunk. You know, a few years after World War II, a child who
was born into poverty had a slightly better than 50-50 chance of becoming
middle class as an adult. By 1980, that chance had fallen to around 40 percent.
And if the trend of rising inequality over the last few decades continues, it’s
estimated that a child born today will only have a one-in-three chance of
making it to the middle class - 33 percent.”
As
refreshing as that honesty is, Obama promised no fix beyond $1 trillion in
spending cuts and a need to work toward an “innovation economy.”
In a
speech one month later, Obama’s Chairman of Economic Advisers, Alan Krueger,
elaborated on the dire state of America’s shrinking middle-class. The
contraction, he stated, could partially be attributed to “skill-biased
technical change”: work activities that have become automated over time,
reducing the need for unskilled labor and favoring those with analytical
training. He also highlighted the 50 year decline in tax rates for the top 0.1
percent, increased competition from overseas workers, and a lack of educational
equality for children. Poor children are denied the private tutors, college
prep and business network of family and friends available to their wealthier
peers, which locks them into the class they are born into.
6) Tax cuts to the wealthiest have not
improved the economy or created more jobs.
Krueger also revealed that the tax cuts
of the 2000s for top earners did not improve the economy any better than they
did in the 1990s (meanwhile, income growth was stronger for lower- and
middle-class families in the 1990s than in the last forty years).
Tax
rates for the top income earners in America peaked in 1945 at 66.4 percent.
Following decades of gradual reductions, they have since been cut in half. During the same time, the
payroll tax has increased since the 1950s and individual income tax has bounced
between 40-50 percent through the present day. Conversely, corporate tax
declined from above 30 percent in the 1950s to under 10 percent in 2011.
All of
these tax cuts are made ostensibly to improve the economy and create jobs.
However, the National Bureau of Economic Research has concluded that it is young
companies, “regardless of their size,” that are the real job creators
in America. Tax cuts to the wealthiest do not create jobs.
7) Incomes for the top 1% have
increased (but the top 0.01% make even more).
Between 1979 and 2007, the average
incomes of the 1 percent increased 241 percent. Compare that to 19 percent growth
for the middle fifth of America and 11 percent for the bottom fifth. Put
another way, in 1980 the average American CEO earned forty-two times as much as
his average worker. In 2001, he earned 531 times as much.
Average
income across the 1 percent is actually stratified into widely disparate
echelons. Compare the $29,840 average income for the bottom 90 percent to the
$161,139 of the top 10 percent. Compare the $1 million average income of the
top 1 percent to the $2.8 million of the top 0.1 percent. Yet both still pale
beside the $23 million average income of the top 0.01 percent.
If
those numbers seem a bit overwhelming, Politizane has created a video that
illustrates this staggering inequality:
8) The majority of Congress does not
feel your pain.
Empowered by the Constitution to represent their constituents, United States
Congress members are, for the first time in history, mostly millionaires. The 2012 financial
disclosure information of the 534 current Congress men and women reveals that
over half of them have a net worth of $1 million or more.
After
the past seven facts it is difficult to read this last one and believe that
these 268 legislators have the best interests of the remaining 99 percent at
heart. But if that is too presumptuous a leap, it is not too bold to say that
wealthier donors, lobbyists and special interest groups enjoy greater access to these lawmakers than the
average American.
In
January, Congress failed to extend emergency benefits for unemployment, leaving
1.3 million people without federal aid. Congress then went on a weeklong recess
that kept them from debating the issue until the end of the month. The bill was
too divisive for Republicans and Democrats to reach an agreement on, though
unemployment was then above 7 percent nationally.
Thankfully,
the unemployed have their Congress working for them. And at $174,000 annual pay, those representatives are
sure to return from their vacations committed to fresh solutions.
(A version of this article originally
appeared in NationofChange. It has been reprinted here
with permission.)
Pierce Nahigyan is a freelance writer whose works have appeared in Foreign Policy Journal, the Los Angeles and Baltimore Post-Examiners, NationofChange, SHK Magazine and elsewhere. He is also the Editor-in-Chief of Planet Experts, an environmentally-focused news and social media site.
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