Inequality back to 1920s level never seen before
The rising inequality in America has been a major issue in the presidential nomination race so far. Senator Bernie Sanders make it one of the key issue of his campaign. His campaign forced Hillary Clinton to include this issue in her speeches. Rising inequality is undoubtedly, biggest issue faced by working people in America. The most powerful country in the world and the biggest economy failed to provide basic services as health and education to its poor.
The capitalist onslaught against the working class and poor gave rise to inequality. The gap between rich and poor increased to the levels not seen before in the recent period. There always been big gap between rich and working people in a capitalist society. But free market economy and neoliberal economic policies widen this gap to unprecedented levels. This gap sharply increased in last three decades when free market and neoliberal onslaught begun. The inequality is going to be a major issue in the presidential campaign between Donald Trump and Hillary Clinton. At least both will give lip service on this issue.
Regan Era 1980s
United States of America is the most unequal country in the so-called developed world. No other developed country can match the sort of inequality established in US by neoliberalism and free market economy. America never saw such levels of inequality that has been developed in last three decades. Since the beginning of Reaganism in 1980s. The capitalist onslaught against public sector, trade unions and welfare benefits and basic services increased the inequality and poverty in US. President Regan oversaw the biggest project of neoliberalism and free market economic policies of privatisation, dismantling of public sector and attacks on the living standards of the working people.
At the same time, capitalist class was given tax cuts and all the opportunities to make super profits. The working class experienced increased exploitation and repression. The policies laid down by Regan created huge gap between rich and the poor. Between 1 percent and 99 percent.
The rise in inequality is highest in 3 decades
The rise in inequality experienced in the US in the past three decades is not just a story of those in the financial sector in the greater New york City metropolitan area reaping outsized rewards from speculation in financial markets. While many of highest- income families do live in states such as New York and Connecticut, IRS data make clear that rising inequality and increases in top 1 percent incomes affect every state, Between 1979 and 2007, the top 1 percent of families in all states captured an increasing share of income. And from 2009 to 2013, in the wake of Great Recession, top 1 percent incomes in most states once again grew faster than the incomes of bottom 99 percent.
Inequality in America is growing, even at the top. The nation’s highest 0.1 percent of income-earners have, over recent decades, seen their incomes rise much faster than the rest of the top 1 percent. Incomes in this top 0.1 percent increased 7.5 times between 1973 and 2007, from 0.8 percent to an all-time high of 6 percent. The Great Recession in 2008 did dampen this top 0.1 percent share, but only momentarily. The upward surge of the top 0.1 percent has resumed.
The gap between rich and poor widened
The 1990s saw the annual incomes of the ultra rich explode in size. Between 1992 and 2002, the 400 highest incomes reported to the Internal Revenue Service more than doubled, even after the collapse of the dot.com bubble in 2000. In the early 21st century, the economic boom driven by the real estate bubble would more than triple top 400 average incomes before the 2008 economic collapse.
High levels of income concentration are pervasive across the country, but there are important differences among states. Connecticut has the highest threshold for entry into the top 1 percent. At least $677,608 in annual income is needed to be a member of this elite group in that state. That’s three times the minimum needed to be among the top 1 percent in bottom-ranking Arkansas.
Stagnant wages and falling living standards of workers
Before the 1980s, lower-income earners owned a far larger portion of total U.S. income than they do today. How much more income would these earners be making today if the United States had the same distribution of income as the nation displayed in 1979. NPR found that Americans would experience income increases of at least $3,000 across all quantile levels, with the highest quintile owed an additional $17,311. The top 1 percent of earners would see a dramatic fall in their income, losing more than just $824,844.
In the United States today,unionisation and collective bargaining levels are at historic lows not seen since 1928. The capitalist onslaught and the capitulation of the union leadership with the ruling class weaken the unions in last three decades. Trade unions have lost much of their power and capitalist class has taken full advantage of this situation and made big gains at the expense of the workers.This reflects from the fact that the gap between worker and CEO pay was nine times larger in 2013 than in 1980.
Wages in the United States, after taking inflation into account, have been stagnating for more than three decades. Typical American workers and the nation’s lowest-wage workers have seen little or no growth in their real weekly wages.The federal minimum wage purchases fewer goods and services than it did in 1968. Even the OECD report stress the need to raise minimum wage for workers to improve their falling living standards.
Between 1979 and 2007, paycheck income of the top 1 percent of U.S. earners exploded by over 256 percent. Meanwhile, the bottom 90 percent of earners have seen little change in their average income, with just a 16.7 percent increase from 1979 to 2014. Productivity has increased at a relatively consistent rate since 1948. But the wages of American workers have not, since the 1970s, kept up with this rising productivity. Worker hourly compensation has flat-lined since the mid-1970s, increasing just 15.5 percent from 1979 to 2013, while worker productivity has increased 132.8 percent over the same time period.
Inequality back to 1920s level
According to Economic Policy Institute (EPI) “Income inequality has risen in every state since the 1970s and in many states is up in the post Recession era. In 24 states, the top 1 percent captured at least half of all income growth between 2009 and 2013, and in 15 of those states, the top 1 percent captured all income growth. In another 10 states, top 1 percent incomes grew in the double digits, while 99 percent incomes fell. For United States nationally, the top 1 percent captured 85.1 percent of total income growth between 2009 to 2013. In 2013 the top 1 percent of families nationally made 25.3 times as much as the bottom 99 percent”.
“As the figure makes it clear, income inequality reached a peak in 1928 before declining rapidly in 1930s and 1940s, and then more gradually until the late 1970s. But since 1970s, the capitalist class experienced unprecedented growth in their wealth. The income share of capitalist class in US is near to its 1928 peak”.
Middle class also suffering
The middle class is also being affected by this rising inequality and concentration of the wealth into fewer hands. The growing inequality halted growth in living standards of middle class. The Economic Policy Institute’s The State of Working America, 12th edition found that between 1979 and 2007, had the income of the middle fifth of households grown at the same rate as overall household income. It would have been $18,897 higher in 2007. That means 27percent more higher than it actually was.
In other words, rising inequality imposed a tax of 27% on middle income households over this period. As the share of wealth for top 1 percent increased, at the same time earnings of the middle class families declined. The rich has increased their income at the cost of working class , poor and middle class. The poor has suffered the most and deep poverty increased.
American dream is no more a dream but a nightmare for working people and poor. The poverty has increased and living standards rapidly falling. The class repression and exploitation has increased to highest levels in last few decades. This super exploitation, lower wages, less rights for workers and repression contributed enormously in the increase of inequality.
That is why, the young people including young workers are getting radicalised rapidly compare to any other developed country. There is big anger and discontent in the layers of population against neoliberalism and free market economy. The massive support enjoys by Bernie Sanders on the slogan of democratic socialism is the reflection of this trend. The US undoubtedly is the most responsive country in the world for the left politics and ideas of socialism.