‘We Were Shocked’: Rand Study Uncovers Massive Income Shift To The Top 1%

from Fast Company

Just how far has the working class been left behind by the winner-take-all economy? A new analysis by the RAND Corporation examines what rising inequality has cost Americans in lost income—and the results are stunning.

A full-time worker whose taxable income is at the median—with half the population making more and half making less—now pulls in about $50,000 a year. Yet had the fruits of the nation’s economic output been shared over the past 45 years as broadly as they were from the end of World War II until the early 1970s, that worker would instead be making $92,000 to $102,000. (The exact figures vary slightly depending on how inflation is calculated.)

The findings, which land amid a global pandemic, help to illuminate the paradoxes of an economy in which so-called essential workers are struggling to make ends meet while the rich keep getting richer.

“We were shocked by the numbers,” says Nick Hanauer, a venture capitalist who came up with the idea for the research along with David Rolf, founder of Local 775 of the Service Employees International Union and president of the Fair Work Center in Seattle. “It explains almost everything. It explains why people are so pissed off. It explains why they are so economically precarious.”

More here.

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One Comment

  1. Economic inequality has been a problem in the USA for a long time. It’s hard to grasp how large this social and economic problem is in the USA, while we are the wealthiest country in the world. There are countless factors which have allowed the rich to get richer in the US, while the poor get poorer. First of all, technological innovation has led to increased job opportunities for those with college educations and has removed middle income skilled jobs for those without a college education. This income disparity multiples after one considers the connection between generational wealth and higher education. Those who have more money can more easily afford to send their children to college, while those with lower incomes can’t as easily afford to do so. Also, the minimum wage has not been raised in tandem with inflation. This reduction of earnings potential for unskilled employees without college educations brings these individuals and their families deeper into poverty. Furthermore, union membership has decreased significantly from the 1960’s to current day. Reducing the bargaining power of employees has led lower income workers into worse financial conditions.

    On a more positive note, poverty has been declining in the US since President Johnson declare the War on Poverty. He created social programs geared toward reducing poverty and its negative effects on society. Some of his social programs included food stamps and social security. While social security was and still is highly effective at reducing elder poverty, it fails to alleviate child poverty. Biden’s Advance Child Tax Credit payments are a step in the right direction at helping combat child poverty.

    While inequality will always exist to some extent, the dynamics of economic inequality are changing in the US. There are currently more families living below the poverty line in suburban neighborhoods than in urban or rural areas. In the 1950’s the largest number of families in poverty were living in cities and rural neighborhoods. This flip of the location of impoverished families is problematic as cities have invested significantly more money into combating poverty than suburban neighborhoods. Since impoverished people are living in neighborhoods which lack the government support and resources available to help them, they are struggling extensively. While the image of poverty in the US is evolving and devastating to many families, tax cuts have benefited the rich. This money which could have been used to help families in need, has instead grow significantly in the stock market and has been benefiting the 1% in the form of passive income. While the economic status of most Americans has become worse, the rich keep benefiting from regressive policies and deregulation. Inequality and economic stratification are becoming significantly more prevalent in American society, and they are unfortunately creating a world where the American Dream is no longer possible.

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