USA: More billionaires, more poor people
by Betsy Leondar-Wright* A report by United for a Fair Economy, Divided Decade: Economic Disparity at the Century's Turn, shows that the record-breaking economic boom of the 1990s has left Americans even more polarised and debt- ridden. For a quarter-century after World War II (between 1947 and 1979), families at all levels of income distribution saw their incomes double. But the next quarter-century changed course dramatically. Between 1979 and 1998, the top fifth gained 38 per cent and the top five percent gained 64 per cent — while the bottom fifth lost five per cent of real income. In 1989, the United States had 66 billionaires and 31.5 million people living below the poverty line. A decade later, the US has 268 billionaires and 34.5 million people living below the official poverty line — about $13,000 for a family of three. At the dawn of the 21st century, the distribution of wealth has regressed to the perilous inequality of the 1920s. The top one per cent of households has more wealth than the combined wealth of the bottom 95 per cent. Since 1977, the top one per cent has doubled its share of the nation's wealth to 40 per cent. Together, the 400 richest Americans are worth more than $1 trillion — about one-ninth of the nation's gross domestic product. The people in the Forbes 400 — they could all stay at New York's Plaza Hotel at the same time — have nearly as much wealth as the bottom 50 million households. The nation's prosperity is cruising precariously in a sea of red ink. Total revolving consumer credit — most of it credit card debt — has more than tripled since 1989, while the personal savings rate dropped from seven per cent in 1993 to two per cent in third quarter 1999. Total bankruptcies more than doubled between 1989 and 1999. The Dow has broken 11,000, but a lot of Americans are just plain broke. They have nothing to tide them over in case of a health crisis or unemployment, much less save for college or retirement. Nearly one out of five households has zero or negative net worth (greater debts than assets), compared with one in 10 in 1962. Almost 90 per cent of all the stock and mutual fund value in the booming stock market of the last decade is owned by 10 per cent of the nation's richest households. While the top one per cent was becoming fabulously wealthy, the well-being of the typical American family was stagnating. The inflation-adjusted net worth of the median household fell from $54,600 in 1989 to $49,900 in 1997. The economic boom is on the verge of becoming the longest in US history. But typical workers are still catching up with the wages their counterparts made a quarter century ago. If wages had risen at the pace of productivity — up 46.5 per cent from 1973 to 1998 — the median worker would be earning $17.27 an hour, rather than $11.29, or $12,438 more a year for full-time workers. The pay gap between CEOs and workers is five times wider than it was at the start of the decade, and 10 times wider than it was two decades ago. According to Business Week, CEOs at large companies made 85 times the pay of average factory workers in 1990. By 1998, CEOs were making 419 times the pay of workers. The report, by Chuck Collins, Chris Hartman and Holly Sklar, recommends asset-building policies to include expanded tax-exempt savings programs for low-and middle-income people, a higher minimum wage, policies promoting wider home ownership and other means.
* * **Betsy Leandor Wright is a staff member of United for a Fair Economy.
People's Weekly World