Fueled by Recession, U.S. Wealth Gap Is Widest in Decades, Study Finds
The wealthy are getting wealthier. As for everyone else, no such luck.
A report released on Wednesday by the Pew Research Center found that the wealth gap between the country’s top 20 percent of earners and the rest of America had stretched to its widest point in at least three decades.
Last year, the median net worth of upper-income families reached $639,400, nearly seven times as much of those in the middle, and nearly 70 times the level of those at the bottom of the income ladder.
There has been growing attention to the issue of income inequality, particularly the plight of those earning the federal minimum wage of $7.25 an hour or close to it.
But while income and wealth are related (the more you make, the more you can save and invest), the wealth gap zeros in on a different aspect of financial well-being: how much money and other assets you have accumulated over time, including the value of your home and car plus any investments in stocks, bonds and the like.
Think of it as “a measure of the family ‘nest egg,’ ” as Pew calls it — a hoard that can sustain a household during an emergency, like the loss of a job, and in the long run can see someone through retirement.
The wealth gap “exposes varying degrees of vulnerability,” said Valerie Wilson, an economist at the Economic Policy Institute, a left-of-center research group in Washington, adding that it also was passed down through the generations.
While those at the top have managed to recoup much of the wealth lost during the economic downturn, middle-income families have not made any gains.
“The Great Recession destroyed a significant amount of middle-income and lower-income families’ wealth, and the economic ‘recovery’ has yet to be felt for them,” the report concluded.
Pew, which used data from the Federal Reserve, defined middle income as $44,000 a year for a family of four, while a yearly income of $132,000 for the same-size family pushed a household into the upper ranks. About one in five families qualifies for that higher status, while 46 percent occupy the middle range.
The median household net worth last year for those in the middle was $96,500, only slightly above the $94,300 mark it hit in 1983 (after being adjusted for inflation). A poor household actually had a higher median net worth 30 years ago ($11,400 in 1983) than it counted last year ($9,300). Compare those results with the top fifth of income earners. In 1983, when the Fed began collecting the data, that group had a median wealth of $318,000; in 2013 it owned more than twice that.
Other economists have traced the growing wealth gap to a much narrower slice of the population. In a working paper recently released by the National Bureau of Economic Research, Emmanuel Saez and Gabriel Zucman argued, “The rise in wealth inequality is almost entirely due to the rise of the top 0.1 percent wealth share, from 7 percent in 1979 to 22 percent in 2012.”
The share of wealth controlled by the bottom 90 percent of Americans, they concluded, has steadily declined since the mid-1980s.
More to read with live links found at the NYT.
Let’s Grow! Must Read!
What If Black America Were a Country?
The statistics reveal a fragile state within a superpower.
In a recent debate with a CNN contributor, the conservative radio talk-show host Larry Elder declared that “if black America were a country, it would be the 15th-wealthiest country in the world.” His math proved incorrect, and his invocation of “black America” was followed by a refutation of the concept by a fellow black conservative. Shortly after Elder’s remarks, the Republican strategist Ron Christie argued that there is no such thing as “black America” and, further, that the very notion of it is antithetical “to our national motto of E Pluribus Unum.”
Whether these men know it or not, they are continuing a debate that W.E.B. Du Bois gave voice to 80 years ago in his resignation speech from the NAACP. In a farewell address titled, “A Negro Nation Within a Nation,” Du Bois asserted:
The peculiar position of Negroes in America offers an opportunity. … With the use of their political power, their power as consumers, and their brainpower … Negroes can develop in the United States an economic nation within a nation …
Though Du Bois eventually took an extreme turn toward communism and emigrated to Ghana, the goal of “fellowship and equality in the United States” remained his burning desire. As for the belief that black America is an immense, multifaceted asset to the United States, his instincts were right: Black Americans boast enormous capital that has been exploited over the course of the nation’s history and has yet to be fairly and fully employed to increase prosperity for all Americans.
This decades-old conversation invites a thought experiment: If black America were a nation-state, how would it stack up against other countries? How would it fare on standard measures of national power and weakness?
Naturally, this exercise presumes a monolithic black America, but this is a standard hazard when comparing large entities using statistical medians and per-capita rates. Another obvious concern is that a sub-national, racial demographic is not equivalent to a sovereign nation. Nearly all the sources of black America’s attributes are grounded in America’s history, economy, geography, and government structures. Still, it is this truism that gives weight to the insight revealed by the following charts: Black America is a fragile stateembedded in the greatest superpower the world has ever known.
In the infographics below, two pictures emerge. The first is of a strong nation with considerable manpower and purchasing power. The second is of a troubled, fragile state suffering from socioeconomic disparities and structural subjugation in ways that degrade life, liberty, and the pursuit of happiness (on some measures, black America resembles countries like Brazil, China, and Russia—emerging powers that are struggling with stark economic inequality). Essentially, what we’re witnessing is a nation that is comparable in certain ways to a regional power existing in the state of Disparistan (or, perhaps, Despairistan). This is more than an inconvenient truth; it fundamentally undermines the United States’ greatest contribution to humanity: the American idea.
The statistics tell the story.
Much more with graphs shown found HERE.
Papal assist aside, economics are the reason Cuba ditched Venezuela for America
The diplomatic break-through between the United States and Cuba is clearly a major second-term coup for President Barack Obama, but in reality, the island nation’s willingness to expedite the pace of reform was forced upon it due to Venezuela’s diminishing ability to continue offering financial support.
Facing a liquidity crisis and mounting economic distortions in Venezuela, the Maduro regime is being forced to dramatically ratchet back the support it offers to its Central American and Caribbean neighbors through its Petrocaribe program. The outlook for Caracas is grim with many analysts believing the country is facing the prospect of a sovereign default next year unless there is a major rebound in global oil prices, which largely underpins Venezuela’s economy.
Venezuela’s economy is set to contract by at least 4% this year and next, while inflation is at 63% and is on pace to reach triple digits next year. At the same time, dollar scarcity has forced the government to dramatically cut back on imports, leading to mounting goods scarcity and causing President Nicolas Maduro’s approval ratings to plummet. The president enjoys popular support of just 22%, according to the most recent Datanalisis poll, while 84% of respondents believe the country is heading in the wrong direction. With crude oil having shed 50% of its value this year, countries like Venezuela whose economies are dependent on oil have suffered extensively.
Through the Petrocaribe program, Venezuela provides oil with generous financing and repayment terms to its allies in the region. In the case of Cuba, Venezuela had been providing around 100,000 barrels per day of oil, far more than the nation requires for its daily needs. That has allowed Cuba to sell the balance—estimated as being as much as 40,000 barrels a day—on the open market and pocket the proceeds.
Already though, to Cuba and other regional allies, Venezuela has been scaling back the program given the rapidly growing financial restraints it faces at home. In the case of Cuba, the flow of oil from its formerly wealthy neighbor has already dropped by as much as 25% over the past year, according to private estimates. With Venezuela’s oil basket now at $53 per barrel, that trend seems certain to continue, a factor that no doubt figured highly in the minds of Raul Castro as he mulled striking an agreement with the US.
The compact announced simultaneously by Obama and Castro on Wednesday is likely not the tipping point in terms of moving the island firmly towards a democratic nation open to foreign investment, even though it will no doubt increase the clamoring inside of Cuba for greater access to the US and other markets. Still, Cuba will benefit from increased commercial ties (even without the embargo being lifted) and access to multi-lateral financing. The real turning point may be when Raul Castro hands over the reins of power to presumed successor Miguel Diaz-Canel, who is widely seen as having reformist sympathies, when the said tipping point could be reached.
Diaz-Canel, the current vice president, is just 54 years old, a relative youngster when compared to the Castro brothers. He has increasingly been the public face of government policies, including the reform agenda, and with few alternative financing options, will likely have to expedite the pace of economic reform. Interestingly, Pope Francis has been credited in media reports as having helped broker the talks between the Obama administration and the Castro regime, and to be sure, his efforts in the country go back years, given his background as a cardinal in Latin America.
But having said all that, Cuba’s willingness to reach a deal that was highly unlikely with the US only months ago, speaks volumes both about Havana’s reliance on Venezuela’s economic largesse, and also on the rapidly deteriorating state of the economy in Venezuela. It is logical to assume that with slightly greater access to the US market, an increase in remissions from Cubans living in the US, and greater ability for Americans to travel to, and do business with, its island neighbor, Cuba’s dependence on Venezuela will continue to lessen in the waning years of the half-century Castro brothers rule.
Evolution in our national science museum, thanks to David Koch
Say what you will about the Koch brothers (and there is much to say), but thanks to GOP billionaire David Koch, 8 million people per year are schooled in the reality of evolution at the Smithsonian’s National Museum of Natural History in Washington, DC.
You see, among other socially liberal causes like PBS, Koch has funded an entire “evolution” exhibit at the federal government’s only national science museum.
Read it all HERE.
“Jeb Bush has made it clear that he wants to win the Republican nomination without needing the votes of the Republican base, i.e., the Tea Party.
He doesn’t want to have to sell his soul for the Tea Party vote. What that means is, he doesn’t want to have to pretend to be a conservative at any time during the primary to get the Tea Party or conservative vote… He’s not gonna pander. And as evidence, I offer you this from the Washington Times. This is back in 2009, May 3 of 2009, but it’s important that you have this in the hopper.
“Former Florida Gov. Jeb Bush said Saturday that it’s time –” this is May 3rd of 2009, so five years ago, admittedly, but it fits nicely with yesterday. “Former Florida Gov. Jeb Bush said Saturday that it’s time for the Republican Party to give up its ‘nostalgia’ for the heyday of the Reagan era and look forward, even if it means stealing the winning strategy deployed by Democrats in the 2008 election.” –Rush Limbaugh