We have become two Americas — literally, the 99% and the 1%. We have what a Citigroup investment brochure called the most eye-popping concentration of wealth in a great power since 16th century Spain. The numbers are staggering. From 1979 to 2011, 84% of the nation’s increase in income has gone to the wealthiest 1%, according to Alan Krueger, a Princeton economist who now chairs the White House Council of Economic Advisers.
For the previous 30 years, from 1945 through the 1970s, middle-class Americans shared in the nation’s growing prosperity. Based on Labor Department reports, economists tell us the productivity of the U.S. workforce rose 97% from 1945 to 1973, and the income of the average family rose 95%. In short, average workers reaped the benefits of rising U.S. efficiency along with their bosses.
But since 1973, the picture has changed: Productivity has risen 80%, economists report, but the average family’s income has risen only 10%, and that bump has come primarily because more women have entered the workforce, not because wages have gone up. According to the Census Bureau, the typical male worker made the same hourly pay and benefits in 2011 as in 1978, adjusted for inflation. Three decades of going nowhere.
This has serious consequences for all of us. When the super-rich get so much of the growing economic pie and the middle class gets so little, the wide income gap hurts U.S. economic growth. The evidence is unambiguous, reports Harvard economist Philippe Aghion. Multiple studies, he says, document that “greater inequality [of income] reduces the rate of growth.”
“It’s not just morally wrong, its bad economics,” Obama added recently, “because when middle-class families have less to spend, guess what? Businesses have fewer consumers.”
Vir: Hedrick Smith, Los Angeles Times