The COVID-19 pandemic has exposed and exacerbated many of the deep rooted problems within American society, including a fragile healthcare system, inadequate resources, and an inequitable employer based health insurance model. However, a critical factor that has contributed to the devastating impact of the pandemic is the extreme income inequality that has plagued the nation for decades. A groundbreaking study by The RAND Corporation, a respected think-tank uncovers the shocking income inequality findings from 1975 to 2018.
The $50 Trillion Elephant
The detailed analysis by the RAND Corporation reveals a staggering statistic: $50 trillion. This is the amount that American workers earning below the 90th percentile have lost due to the upward redistribution of income over the past several decades.
If the more equitable income distributions of the post World War II era had persisted, the aggregate annual income of these workers would have been $2.5 trillion higher in 2018 alone. This translates to an extra $1,144 per month for every single working American in the bottom 90% population. Essentially, America is made of maybe three tiers of wealth among citizens with the vast amount of income going to the top 1% in our country.
Watch Video Analysis on the Income Distribution in America 1975 - 2018 ...
The Consequences of Inequality
The cumulative cost of this radical inequality experiment has surpassed $50 trillion. This is money that could have gone into the paychecks of working Americans, fostering a larger and more prosperous economy. It's money that could have enabled the vast majority of Americans to enter the pandemic healthier, more resilient, and financially secure. And most importantly enabled our kids to live a better quality of life.
The Turning Point
The RAND study found around 1975, the era of broadly shared prosperity ended. Since then, the wealthiest Americans, particularly the top 1 percent and 0.1 percent, have captured almost all of the nation's economic growth. Their real incomes have soared, while the vast majority of Americans have seen little to no gains.
The Impact on Workers
Wage earners at every income level up to the 90th percentile are now being paid a fraction of what they would have if inequality had remained constant. The median income full-time worker is losing about $42,000 a year due to extreme inequality.
For example, at every income level up to the 90th percentile, wage earners are now being paid a fraction of what they would have had inequality held constant. Moreover at the median individual income of $36,000, workers are being shortchanged by $21,000 per year—$28,000 when using the CPI—an amount equivalent to an additional $10.10 to $13.50 an hour. Multiple this discrepancy over 40 years or more, it adds up huge.
But according to Price and Edwards, this actually understates the impact of rising inequality on low- and middle-income workers, because much of the gains at the bottom of the distribution were largely “driven by an increase in hours not an increase in wages.” To adjust for this, along with changing patterns of workforce participation, the researchers repeat their analysis for full-year, full-time, prime-aged workers (age 25 to 54). These results are even more stark: “Unlike the growth patterns in the 1950s and 60s,” write Price and Edwards, “the majority of full-time workers did not share in the economic growth of the last forty years.”
On average, extreme inequality is costing the median household income full-time worker about $42,000 a year. Adjusted for inflation using the CPI, the numbers are even worse: half of all full-time workers (those at or below the median income of $50,000 a year) now earn less than half what they would have had incomes across the distribution continued to keep pace with economic growth. And that’s per worker, not per household. At both the 25th and 50th percentiles, households comprised of a married couple with one full-time worker earned thousands of dollars less in 2018 dollars than a comparable household in 1975—and $50,000 and $66,000 less respectively than if inequality had held constant—a predicament compounded by the rising costs of maintaining a dignified middle-class life.
Half of all full-time workers now earn less than half of what they would have if incomes had kept pace with economic growth. This translates to thousands of dollars less per year for households at both the 25th and 50th percentiles compared to 1975. It's a major contributor to the crime rates, and childhood poverty in America.
Further, many studies show significant monopoly control of industries such as media information, beer, food, oil, water, electricity, building supplies among other markets largely dominated by just a very few companies. Meanwhile, the political power is mostly influenced by big money lobbyists calling the shots with little real say from the American people. Change is necessary going forward.
Conclusion
Although, the COVID-19 pandemic accelerated the devastating consequences of extreme income inequality in America. The $50 trillion upward redistribution of income was already well underway leaving the vast majority of Americans more vulnerable and less financially secure. Addressing this clear income inequality is crucial for building a more prosperous and equitable society in the future. American voters must educate themselves better and find new solutions to achieve true freedom and a greater sense of community pride, respect and patience with one another.
About Author
James E Dean - Director, Art Book Video Shop ... James loves to read, learn about old collectibles and study new ideas that may produce optimal results. Mr. Dean brings over 35 years of experience across a wide range of industries worldwide. He is considered by many to be a leading expert in the energy sector, retail eCommerce, brand marketing and AI technology. J Dean is also a frequent Blogger, and graduate of Boston University. He enjoys collecting antiques, history, travel and fitness. Inquiry: Email Message
In the late 1980s, Mr. Dean worked at Fidelity Investments and American Finance Group, as Marketing Manager in Boston, Massachusetts. From there, James E Dean joined IMAGRAPH, a company that pioneered digital compression technology for medical CT-Scan and MRI applications, U.S. defense satellite imaging and broadcast digital video production markets. The company later went public (NASDAQ: LUMI). Subsequently, Mr. Dean became involved 1990s as a co-founder at Artel Software / BorisFX in Boston, Massachusetts; where he helped pioneer broadcast digital effects, video editing systems, advanced algorithms for software and hardware video production systems. The company later partnered with AVID Technology to go public (NASDAQ: AVID). Working in this role for many years, Mr. Dean lead the development team that partnered with AVID Technology, SONY, Microsoft, Apple, Panasonic, D-Vision Systems, IBM and MATROX to develop the digital video production industry which has enabled consumers i.e. ordinary people to create broadcast quality information, stories and share knowledge on networks worldwide. Often, J Dean was a frequent tech evangelist at the National Broadcast Convention (NAB) and Consumer Electronics Show (COMDEX) in Las Vegas. In the mid 2000s, James E Dean went on to launch several digital media and AI technology companies with a focus on business development, startup capital funding VC, eCommerce programming and creative multimedia services delivering broadcast quality text, image and rich video content, a role he enjoys today as the Director. Learn More About Us
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