The Guardian February 23, 2000

USA: More billionaires, more poor people

by Betsy Leondar-Wright*

A report by United for a Fair Economy, Divided Decade: Economic 
Disparity at the Century's Turn, shows that the record-breaking 
economic boom of the 1990s has left Americans even more polarised and debt-

For a quarter-century after World War II (between 1947 and 1979), families 
at all levels of income distribution saw their incomes double. But the next 
quarter-century changed course dramatically.

Between 1979 and 1998, the top fifth gained 38 per cent and the top five 
percent gained 64 per cent  while the bottom fifth lost five per cent of 
real income.

In 1989, the United States had 66 billionaires and 31.5 million people 
living below the poverty line. A decade later, the US has 268 billionaires 
and 34.5 million people living below the official poverty line  about 
$13,000 for a family of three.

At the dawn of the 21st century, the distribution of wealth has regressed 
to the perilous inequality of the 1920s. The top one per cent of households 
has more wealth than the combined wealth of the bottom 95 per cent.

Since 1977, the top one per cent has doubled its share of the nation's 
wealth to 40 per cent.

Together, the 400 richest Americans are worth more than $1 trillion  
about one-ninth of the nation's gross domestic product.

The people in the Forbes 400  they could all stay at New York's 
Plaza Hotel at the same time  have nearly as much wealth as the bottom 50 
million households.

The nation's prosperity is cruising precariously in a sea of red ink. Total 
revolving consumer credit  most of it credit card debt  has more than 
tripled since 1989, while the personal savings rate dropped from seven per 
cent in 1993 to two per cent in third quarter 1999.

Total bankruptcies more than doubled between 1989 and 1999. The Dow has 
broken 11,000, but a lot of Americans are just plain broke.

They have nothing to tide them over in case of a health crisis or 
unemployment, much less save for college or retirement. Nearly one out of 
five households has zero or negative net worth (greater debts than assets), 
compared with one in 10 in 1962.

Almost 90 per cent of all the stock and mutual fund value in the booming 
stock market of the last decade is owned by 10 per cent of the nation's 
richest households.

While the top one per cent was becoming fabulously wealthy, the well-being 
of the typical American family was stagnating. The inflation-adjusted net 
worth of the median household fell from $54,600 in 1989 to $49,900 in 1997.

The economic boom is on the verge of becoming the longest in US history. 
But typical workers are still catching up with the wages their counterparts 
made a quarter century ago.

If wages had risen at the pace of productivity  up 46.5 per cent from 
1973 to 1998  the median worker would be earning $17.27 an hour, rather 
than $11.29, or $12,438 more a year for full-time workers.

The pay gap between CEOs and workers is five times wider than it was at the 
start of the decade, and 10 times wider than it was two decades ago.

According to Business Week, CEOs at large companies made 85 times 
the pay of average factory workers in 1990. By 1998, CEOs were making 419 
times the pay of workers.

The report, by Chuck Collins, Chris Hartman and Holly Sklar, recommends 
asset-building policies to include expanded tax-exempt savings programs for 
low-and middle-income people, a higher minimum wage, policies promoting 
wider home ownership and other means.

* * *
*Betsy Leandor Wright is a staff member of United for a Fair Economy.
People's Weekly World

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