Who We Are

Background: From 1992-2000, there was unprecedented strength in the U.S. economy along with low inflation. That strength, along with other factors, helped reduce unemployment, welfare rolls, and poverty, while increasing homeownership and median family income.

Problem: Despite these improvements, over 20 million remain in poverty, many of whom are children. And there is a growing gap between the very well-to-do in America and the rest of the U.S. population.

"A NEW PATHBREAKING Congressional Budget Office study, which includes the best data that any agency or institution has compiled on income and tax trends in recent decades, shows that the average after-tax income of the richest one percent of Americans grew by $414,000 between 1979 and 1997, after adjusting for inflation, while average after-tax income fell $100 for the poorest 20 percent of Americans and grew a modest $3,400 for those exactly in the middle of the income spectrum. In percentage terms, after-tax income grew an average of 157 percent over this period for the top one percent of the population, rose a modest 10 percent — about one-half of one percent per year — for the 20 percent of Americans in the middle of the income spectrum and was effectively unchanged for those in the bottom fifth." See "PATHBREAKING CBO STUDY SHOWS DRAMATIC INCREASES IN BOTH 1980s AND 1990s IN INCOME GAPS BETWEEN THE VERY WEALTHY AND OTHER AMERICANS," citing Congressional Budget Office (CBO), "Historical Effective Tax Rates, 1979-1997," Preliminary Edition, May 2001.

Problem: This disparity in economic resources and income is greater in the U.S. than in other developing countries. Result: increasing doubt that the American Dream can ever be real for those who lack access to capital, educational opportunity, affordable health care, and other essentials for the "ladder of opportunity" to work.
Source: Weisman, "The Clinton Legacy: Good Luck Was Put to Good Use," USA Today, January 12, 2001, p. 6A, and accompanying table, "The Clinton Years What Happened to the Economy."

"How various key economic indicators have changed compared with when President Clinton was elected in 1992: . . .welfare recipients: 1992 - 13.6 million, 2000 - 5.8 million; unemployment rate: 1992 - 7.5%, 2000 - 4.0%; black unemployment rate: 1992 - 14.2%, 2000 - 7.6%; hispanic unemployment rate: 1992 - 11.5%, 2000 - 5.7%; poverty rate: 1992 - 14.8%, 2000 - 11.8%; homeownership rate: 1992 - 64.2%, 2000 - 67.7%."

Sources: "Facts and Figures," www.inequality.org; Edward N. Wolff, "Recent Trends in Wealth Ownership, 1983-1998," April 2000. Table 2. Available on the website of the Jerome Levy Economics Institute at www.levy.org/docs/wrkpap/papers/300.html; Keith Bradsher, "Rich-poor Disparity in U.S. Worst Among Industrial Nations," New York Times, April 17, 1995

In 1998, the top 1 percent of the population owned 38.1 percent of the wealth of the country, whereas the bottom 40 percent of the population owned 0.2 percent. This represents a 4.3 percent increase in the ownership of wealth by the top 1 per cent since 1993, while the bottom 40 percent suffered a relative decline in ownership of wealth of 0.7 percent since 1993.

In 1998, the top 5 percent of the population owned almost 60 percent of the country's wealth, while 60 percent of the population owns less than 5 percent of the economic resources.

During the 1993-98 period, household net worth of the top 1 percent increased by 42.2 percent, while household net worth of the bottom 40 percent declined by over 75 percent.

In 1995, the typical black household held only 12 percent of the wealth of the typical white household. With housing excluded, that figure would be 1 percent. More than 30 percent of black households (and 15 percent of white households) have no net worth.

"Widely cited Census Bureau data shows that the bottom fifth of American households earns 3.6 percent of total income, compared to 49 percent for the top fifth. However, the gap is narrower if measured on a per capita, rather than per household, basis. By this measure, the poor group earns 9.4 percent of all income while the wealthy group takes home 39.6 percent. The difference crops up because wealthier households tend to be larger: the top fifth includes 64 million Americans, while the bottom fifth holds just 40 million. (Fortune, 9/4/00)"

"New studies on the growing concentration of American wealth and income challenge a cherished part of the country's self-image: They show that . . . the United States has become the most economically stratified of industrial nations."

"Federal Reserve figures from 1989, the most recent available, show that the wealthiest 1 percent of U.S. households -- with net worth of at least $2.3 million each -- own nearly 40 percent of the nation's wealth. By contrast, the wealthiest 1 percent of the British population own about 18 percent of the wealth there -- down from 59 percent in the early 1920s."

"Further down the scale, the top 20 percent of Americans -- households worth $180,000 or more -- have more than 80 percent of the country's wealth, a higher figure than in other industrial nations. "

"Income statistics are similarly skewed. At the bottom end of the scale, the lowest-earning 20 percent of Americans earn only 5.7 percent of all the after-tax income paid to individuals in the United States each year. In Finland, a nation with an exceptionally even distribution of income, the lowest-earning 20 percent receive 10.8 percent of such income."

It should be noted, however, that some critics suggest that income disparity analysis may overstate the income gap to some degree insofar as it fails to take account of welfare payments and food stamps.

"Margaret Weir, a senior fellow in government at the Brookings Institution, called the higher concentration of incomes and wealth 'quite divisive,' especially in a country where the political system requires so much campaign money. 'It tilts the political system toward those who have more resources,' she said, adding that financial extremes also undermine the 'sense of community and commonality of purpose.'"

"Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a Washington research group, observed, 'When you have a child poverty rate that is four times the average of Western European countries that are our principal industrial competitors, and when those children are a significant part of our future workforce, you have to worry about the
competitive effects as well as the social-fabric effects.'" (NYTimes, 4/17/95)

For more information on this topic, see Ackerman & Alstott, The Stakeholder Society, New Haven: Yale University Press, 1999.

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