Two Americas: Income inequality in the U.S.

In the spirit of this Holiday season, I am highlighting America’s less fortunate. Here are a few facts that may surprise some of you. Despite the lowest unemployment rates since the 1960’s, income inequality remains rampant – the highest it has been since the 1920’s. 90% of us have seen our incomes decline or stay stagnant in the past 30 years according to a recent New York Times article. A 2019 Report by the Federal Reserve states that 40% of American households would have trouble paying a $400 emergency expense. That same New York Times article states that America has the highest levels of inequality among advanced nations and the lowest level of economic opportunity. All this is at a time when the economy is supposedly booming.

Our economic and political leaders tell us that the reasons for this economic inequality are globalization and technological advances. They also cite the move from an industrial economy to a service economy as the main culprits. While those explanations are certainly part of the story, they are not the whole story. These official explanations make it sound as if there were unforeseen market forces that produced this income disparity, and that these forces were completely out of our control.

These official versions leave out some inconvenient facts. For the past 40 years the US has adopted explicit policies that have promoted income disparity, thus making the problem far worse. The result has been a “wealth grab” with the top 1% now controlling 90% of the Nation’s wealth. One heartbreaking result is that on any given night more than 100,000 children are homeless (Department of Housing and Urban Development, 2018 Estimate).

Just as globalization and technological changes were occurring, we made critical decisions that have brought us to where we are today. Here are some examples. Instead of retraining workers who lost their jobs, we ignored them. Instead of enacting fair tax policies to help middle and lower income individuals, we cut taxes for our wealthiest citizens. Last year the 400 wealthiest families in America had a low average tax rate of 23%. This means the Trumps, the Bezoses, and the Buffetts have lower tax rates than teachers and secretaries.

Corporate policies also contributed to this income inequality. Wealthy corporate leaders and politicians actively pursued policies to discourage and disband labor unions, emphasize deregulation, cut safety nets, and decrease competition. This has led to suppressed wages and benefits, part-time work, and short term employment contacts. The result is lower labor costs and the concentration of wealth in fewer hands. Under the 2017 Tax law, corporations actually paid a paltry average tax of 11%. And a total of 90 companies in the Fortune 500 paid $0 in taxes in 2018 according to the Institute of Taxes and Economic Policy. These tax reductions were supposed to trickle down to workers in the form of increased wages. It never happened. The increased profits were overwhelmingly channeled to dividends for shareholders and bonuses for top executives.

This wealth gap hits families with children the hardest according to a study by professors Christina Davis & Christine Percheski. They examined wealth among families with children and the elderly over the last two decades. Families with children in the top 1% saw their wealth increase by 156%, while parents in the bottom 50% saw their wealth shrink by 260%. About a third of all families had no wealth at all, only debt. These debts not only include credit cards but also education debt and housing debts. The result is that millennials have only a 50-50 chance of doing better financially than their parents. For someone born in the 1940’s that chance was 90%.

This class warfare against struggling Americans plays itself out on so many different levels. Drugs and alcohol addiction, suicides, and depression are all symptoms of this economic disparity. The Center for Disease Control and Prevention provides the grim statistics: over 70,000 overdose deaths in 2017 and 45,000 suicides in 2016. Life expectancy has declined or stayed flat in the last three years in the US. That has not happened since the Spanish flu outbreak of 1918. However, America’s richest white men now live on average 15 years longer than the poorest men. This is roughly the same gap in life expectancy that exists in Nigeria.

This wealth gap didn’t just happen by chance and by itself. We as a Nation helped create it with public policies that have exploited the poor and middle class in order to favor the wealthy. Now we need a fundamental rethinking of public policy priorities to improve lives for the next generation. They deserve better than this. In this Holiday season, it’s the Christian thing to do.

R. Tom Deloe is a resident of Cumberland Township.