This GIF, created by BuzzFeed’s Dorsey Shaw from an animation in the PBS film Park Avenue: Money, Power, & the American Dream, shows a massive income inequality gap that has taken place in America over the past 30 years. The image makes it clear just how quickly the wealth of the top 1% of earners came to dwarf the stagnant wages of, well, the rest of us.
The background: There are many possible reasons for the divergence in income between America’s top earners and its middle class. The controversial PBS documentary zeros in on the role of lobbying efforts, particularly those of the Koch brothers. However, the full story is far more complicated, and at present, no one explanation is sufficient for the rapidly growing divide.
The American middle class has struggled for decades. Wages have stagnated since the 1970s, both as the United States moved away from unionized manufacturing jobs and toward a service economy, and as increasing numbers of lower-paid women entered the workforce. Meanwhile, beginning in the 1980s, post-Washington Consensus globalization enabled corporations to move jobs offshore, lowering wages and increasing competition for jobs, and nailing the coffin the labor movement.
It isn’t simply a matter of a struggling middle class, however. America’s highest earners have seen steep gains in their income and sharp decreases in the taxes they pay. Executive compensation has skyrocketed; CEOs now make well over 700% of what they made in 1978, a number that’s far out of pace with the growth of the companies they’re leading. Meanwhile, tax cuts and loopholes have enabled wealthy individuals to both retain and earn greater returns on their wealth. While some people continue to argue over Bush’s tax cut on top earners, which took the highest income tax rate down from 39.6% to 35%, it’s worth remembering that the top bracket was taxed at a mind-boggling 91% as recently as 1969, as can be seen in the below chart. Capital gains taxes have also fallen; the rate is about half of what it was just 10 years ago.
In short, the rich are earning more in wages, keeping more of that income, earning more from investing it, and keeping more of their investment profits. Talk about #winning.
Source: Mother Jones
The takeaway: Concentrating 80% of our country’s wealth in 20% of the population is damaging to social mobility and to democracy itself. When 400 people have more wealth between them than the bottom 50% of Americans do, that elite group of citizens develops the undemocratic ability to skew national policy in their favor, leaving the rest of us in thrall to their desired laws and their philanthropic whims. Ours is a country of opportunity. We should make sure that the opportunity continues to be available to all, and isn’t increasingly concentrated in the hands of the few.