That's why a new report from the nonpartisan Rand Corp. is so important. Rand's researchers analyzed American incomes between 1975 and 2018 to determine who is earning less money, who's earning more money, and where the money has gone. The results are jaw-dropping.
The true cost of income inequality: $2.5 trillion every year
Each year, $2.5 trillion — yes, trillion with a "T" — has been redistributed from the bottom 90% of Americans to the wealthiest 1 % of all Americans.
That's roughly $50 trillion —again, with a "T"— that used to go to middle-class and working-class Americans that has instead been rerouted to the pockets of the top 1%. When viewed through the data in this report, that huge gap in income inequality doesn't look so much like a law of nature as it does a massive heist.
Thanks to the proliferation of trickle-down policies like tax cuts, wage suppression, and stock-market deregulation, 90% of all Americans are demonstrably worse off financially than they were 45 years ago.
Even those Americans who are lucky enough to be in the upper class — from the 90th to the 99th percentile — have basically been treading water these past few decades. People of color, women, and white men have all lost massive sums of money over the past few decades. It's only the top 1% that has benefited from this $50 trillion transfer of wealth.
Of course, unless we're talking about astronomy or counting grains of sand on a beach, it's difficult for humans to comprehend figures with 12 or 13 zeros. So let's bring those numbers down to a personal level. Let's say you're a median American college-educated worker. Most people would call you comfortable — you likely have a house and a car and a family and all the other trappings of the American dream.
If the ultrarich hadn't rigged the system in their favor, your annual pay would be doubled — somewhere between $48,000 and $63,000 higher per year.
That's about $1,000 or more per weekly paycheck that you could have spent in your community, invested in home improvements, or saved for a rainy day, but which instead went to the wealthiest Americans.
-- So if it feels like you're working harder for less money than your parents' and grandparents' generations, that's because you are. --
"That is what you would have been earning had income distributions remained constant, and had incomes broadly continued to grow at the same rate as the GDP, as they had done in the three decades prior to 1975," he said.
"If we just kept things the same" as they were in the early '70s, Goldstein added, "the median worker would be earning twice what they are now."
Even someone in the very-well-to-do 90th percentile of all workers making $133,000 per year in 2018 would instead be earning $168,000 a year if more equal pre-1975 economic conditions had persisted.
The episode features an interview with Carter Price, a senior mathematician at Rand who coauthored the report, about his team's findings.
"If you look at income from 1947 to 1975, it more or less grew with per-capita GDP across the board," Price said.
The incomes of the poorest Americans and the wealthiest Americans were all growing at roughly the same rate. "If you look after 1975, we see a big difference between what those at the bottom of the income spectrum were making and those at the top," he added.
Was Price surprised by the final $2.5 trillion-per-year total?
"A little bit," he said. "Had someone just asked me to work it out on a napkin, I probably would've come up with about a trillion — that would have been my guess. Obviously this is two and a half times that, and so I was surprised. We definitely checked those numbers a lot of different ways because it was such a large number."
-- This kind of wealth concentration isn't just wage theft on a massive scale — it's terrible for the economy. --
"There have certainly been a lot of studies that indicate that lower inequality supports faster economic growth," Price said. "It's not a clear-cut case, but there is very strong evidence that that's the case."
The possibilities of what America's workers might have done with the 2018 equivalent of an extra $2.5 trillion in every one of the past 45 years is staggering. It's not hard to imagine the streets of our COVID-19-ravaged communities filled with bustling shops and service providers, and the generations of young low-income Americans who might have been able to transform their parents' extra cushion of savings into greater possibilities.
Instead, that exact same money now sits, basically unnoticed, hoarded in the untapped capital of the wealthiest humans in history.
Ultimately, Price said, the paper's findings showed that "a rising tide has not been lifting all boats, and that's understandable and observable. We're hoping that this helps people better quantify that and better understand."
Now that we understand the real price of income inequality, it will be easier to press our leaders into getting our money back. Hanauer urges everyone to share the Rand report with political candidates and everyone else in power.
"Our elected leaders must reckon with this data and grapple with this problem at the scale of the problem," he said.
"If they understand this as a $50 trillion problem," Goldstein said, "we have a better shot at getting a $50 trillion solution."
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