Income Gap

by Dick Mac

Most of the people I know, that I socialize with, are either smart or attractive. Make of that what you will. Smart people generally accept the obvious. Smart people who are attractive generally look good as they accept the obvious.

Nobody that I know, left-wing or right-wing, liberal or conservative, Democrat or Republican, rich or poor, denies that the gap between the rich and poor has changed dramatically in the past thirty years.

People with different ideological beliefs have different ideas about why this is; but today I want to illuminate only that gap, not the causes or effects.

We rely on the Congressional Budget Office to track financial information about our nation, and they generally do a very good job. Also, they tend to be nonpartisan, which is helpful for those of us on all sides of the issues, because as a government agency, access to their data is free - it's public information.

In 1980, we consciously decided to embark on a new era of economic reform, and we have consistently followed that plan ever since. In general, we decided that if we allowed more of the money to remain in the hands of the citizenry then more people would benefit more often as the money remaining in the economy would generate untold profits that would then trickle-down from those at the top to those at the bottom.

The chart above shows that the average income of the top 1% of Americans has increased from about $500,000 annually to about $1,800,000 annually, more than triple.

This is exactly what we were told would happen, and it has been a success!

The top 20% of income earners (including that 1%), which is the group to which many of my peers belong, has also increased, but at a rate significantly less than those from the same group who comprised the top 1%.

The next 80%, which is the vast majority of American families have seen almost no discernible increase in their household income.

So those of us in the top twenty percent have seen some increase in wealth, and those that comprise the top one percent have done amazingly well. Eighty percent of American households, however, have seen no growth, no increase in purchasing power, of wealth, in thirty years.

This article provides more charts illuminating the issue:

Separate but unequal: Charts show growing rich-poor gap