Warnings about the problem of rising economic inequality are not new. A number of prominent economists started sending up flares in the 1970s. But the disastrous 2008 financial crisis, the Occupy Wall Street movement, Thomas Piketty’s best-selling book, and a growing chorus of politicians, activists, and economists have now raised the issue to new heights.
In a recent report, Oxfam outlined how the combined wealth of just 62 people on this Earth is the same as the poorest 3.6 billion people on the planet. It’s almost too hard to grasp how just 53 men and 9 women would hold such immense concentrated wealth, but it’s not a surprise to those of us who have been trying to sound the alarm.
While hundreds of millions of people have been lifted out of poverty since 2000, wealth differences have only become more profound. This time last year, Oxfam predicted that the wealth of the richest 1 percent would surpass the wealth of the rest of us by 2016. That prediction came true even before 2015 came to a close.
Power and privilege are being used to rig the system to continue the gap between the richest and the rest of us to levels we have not seen before. Far from trickling down, income and wealth are instead being pulled upwards at an alarming rate. Here in the United States, we live in the world’s most unequal rich country. In today’s America, the average CEO was paid 296 times what the average worker made – a dramatic increase from 50 years ago when the differential was only about 20 to 1.
Almost all of the national income gains since the Great Recession have gone to the top 1 percent of earners, with much of the rest of the population experiencing stagnant or declining wages. And Congress? Congress has done nothing to increase the federal minimum wage since 2007, which rests at a paltry $7.25 per hour.
Economic inequality goes hand in hand with a myriad of other forms of inequality – in health, education, labor force participation, and political representation and power. Money doesn’t just buy a nice car or a television; it also buys better education and healthcare.
The richest fifth of the US population now lives 13-14 years longer than the poorest fifth, according to a recent study by the National Academies of Science. And while the wealthy largely are able to set the policy agenda, the policy preferences of the general public are very different from the rich.
Extreme inequality is a problem with many causes and many potential solutions, but several stand out. We can raise the federal minimum wage toward a living wage – something that the vast majority of Americans support. Such a raise would not only benefit tens of millions of workers and their families, but also free up federal funds that would otherwise be spent on food stamps and other federal anti-poverty programs to go to other inequality-reducing efforts, such as making child care and college more affordable. We can close the loopholes that enable huge corporations and the very rich to put their income out of the reach of tax collectors. Cracking down on tax havens and inversions, the practice of companies re-incorporating in low-tax countries, would not only bring greater fairness but would also relieve strained government budgets.
Virtually no one comes to the defense of current levels of inequality – at both ends of the ideological spectrum and in between. Everyone should be able to earn enough to provide for their family, save for the future, and have a fair chance to get ahead. Inequality is holding back the economy, both globally and here at home, while hardworking people are finding it tougher and tougher to get ahead.