Wealth inequality in America
I recently received an e-mail from a friend that suggested I watch a certain video that had gone “viral” on YouTube. The video is an interpretation of a study performed by Michael Norton and Dan Ariely, professors at the business schools of Harvard and Duke, respectively. The duo do research in behavioral economics and try to describe their results in plain language. They recently performed a study that asked 5,000 Americans what their ideal distribution of wealth would be, splitting the population into five 20% groups. Then they asked them what they thought the actual distribution of wealth was. Less equal than their ideal, came the answer. But the truth, as Ariely and Norton noted, was that America was much less equal even than that. Reality was twice as far from the average American’s ideal as the average American thought.
The study group’s “ideal” distribution chart was about what I would choose, the top 20% owning 30+% of the wealth, with the next two groups having about 20% each followed by 14% for the fourth group and about 11% for the poorest group. This breakdown represents a strong middle and upper class with lots of support for the lower. The “estimated” chart started to slide to the top 20%. On this chart the top 20% was believed to own almost 60% of the wealth of the United States. The second group held 20%, the third a little over 10%, the fourth 6% and the poorest 4%. The real eye opener is at the “actual” chart. The reality is the top group owns 84% of the wealth, the second 11%, the third 4%, and the fourth and fifth group less than 1% combined.
A couple more facts from the “actual” distribution chart need to be highlighted. The top 1% of the population holds 40% of the nation’s wealth. The bottom 80% only holds 16% between them! And it’s gotten worse in the last 30 years. Today the richest 1% take home 24% of all income while in 1976 they took home only 9%. The top 1% owns over half the nation’s stocks, bonds, and mutual funds. The bottom 50% of Americans hold only 1/2%, meaning they are not able to invest and are just barely scraping by. America’s CEO’s now earn 380 times what their average worker earns. Not their lowest paid worker, their AVERAGE worker. The average worker has to work one full month to make what the CEO earns in ONE HOUR! That’s just not right!
So, here’s what you should know about wealth inequality in the United States: It’s worse than Americans want it to be, much worse than they think it is, and it’s increased over the last few decades. Which is one reason that there’s been more talk of a wealth tax lately.
It’s very hard to describe on paper how skewed the charts actually look so I suggest you view the video interpretation yourself by Googling “wealth inequality” or at the following web addresses:
After viewing, I urge you to encourage friends and family to watch it. Our nation’s poor and middle class are now hurting as much or more than at any time in history and we need to do something about it.
Maybe increasing taxes on the wealthiest 1% isn’t such a bad idea. What do you think?