08 August 2017 | Chuck Collins | The Next System
The US economy’s deep systemic inequalities of income, wealth, power, and opportunity are part of global inequality trends, but US-style capitalism and public policy make inequalities more acute. Their observable and felt harm to our civic and economic life is corroborated by research from many disciplines. Yet, by the same token, moving toward a more egalitarian society would realign most aspects of economic and social life for the better. So how can we bring these changes about?
For starters, we must know what we are up against. These inequalities do not spring mainly from technological change and globalization, though both compound and complicate the rift. Instead, imbalances of power and agency embedded in our political and economic system are the main drivers and accelerators of inequality.
Reducing inequality requires a “next systems” analysis and playbook. Here, we briefly examine our current inequality predicament and show how these inequalities undermine our democracy, economic stability, social cohesion, and other cherished values. We then explore the systemic causes, perpetuators, and superchargers of inequalities and, finally, evaluate policy interventions and pressure points for leveling them.
The path through this thicket is only partly uncharted. The United States can learn from other advanced industrial countries with significantly less inequality, adapting policies and practices to US needs and circumstances. We can also learn from our own history—from understanding that our rigged rules have been racially biased—to how we dramatically reduced inequality between 1940 and 1975.
That said, part of the path is uncharted. Grappling with climate change and other breached ecological boundaries—whether ocean acidification, fresh water contamination, or methane dumping—intensifies the challenges of reducing extreme inequality. And many of the New Deal and post-World War II policies that reduced inequality for earlier generations won’t work now given today’s levels of population, resource consumption, and ecological risk.
Together, the extent and widely felt effects of inequality challenge us to put a fine-tuned combination of historical insights, policy innovations, best practices, and fresh thinking to the test. Just as urgently, we also need a vision of a more equal and opportunity-rich society.
Today’s climate of extreme inequality reflects forty years of polarizing wages, wealth, and opportunity. Signs of the times include:
Over the past four decades, the US economy has doubled in size, but the bottom half of US house- holds has seen no income gains. In 1970, the bottom half of wage earners made an average of $16,000 a year in current dollars. By 2014, this group’s earnings had risen to only $16,200. During those same years, the top 1 percent of workers saw their annual income grow from an average of $400,000 to $1.3 million.1
Wage stagnation has been masked in many households by people working longer hours, assuming debt, and enlisting more household members to take paid jobs. Almost half of US workers earn under $15 an hour. One in three earns less than $12 an hour.2
Despite four decades of economic expansion, poverty in the US has changed little. Over 43 million people—one of every seven Americans— live below the poverty line in urban and rural communities. The poverty rate for African Americans is 24.1 percent; for Latinos, it is 21.4 percent. One in five children lives in poverty.3 Most poor people work, but others cannot because they are disabled, mentally ill, or too young or old. Such poverty spells hunger and food insecurity, insufficient health care, poor and unsafe housing, lack of savings or financial cushion, and social exclusion and marginalization.4
Income Inequality Across Regions, States, and Cities
In 2013, the nation’s top 1 percent of households made 25.3 times as much as the other 99 percent. Some states are more unequal than others. Nine—including New York, Connecticut, and Wyoming—have gaps between the top 1 percent and the bottom 99 percent that exceed forty to one.
Our country’s most unequal county is Teton, Wyoming, home to the billionaire sanctuary of Jackson Hole. In Teton, the average income of the 1 percent is a whopping $28.1 million, over 233 times the average incomes of other 99 percent. The most relatively equal county in the US is Wade Hampton, Alaska. There, the 1 percent’s average income of just under $150,000 is only five times the average income of the other 99 percent.7
Changing Nature of Work
Over the past thirty years, the nature of work has changed. A growing percentage of the US workforce holds jobs that are contingent and part time, typically without security, health care, and benefits. The millions of new workers in the “sharing economy” who rent rooms out or drive for Uber as independent contractors number among them.
Technological change is also displacing a growing segment of jobs. According to one Oxford study, about 47 percent of US occupations are at risk of elimination due to technological change and automation.8 The jobs most likely to be “substituted by computer capital” are transport and logistics, with the advent of self-driving vehicles, and office support. We can expect polarization of the job market as one result, with a continued decline in middle-skill jobs, such as manufacturing and certain service jobs, and an expansion of low-skill and high-skill professionally trained jobs.9
The distribution of assets and wealth is even more unequal than income distribution. Median net worth for most US households has stagnated or fallen. The share of wealth owned by the richest 1 percent of households has increased from 33.8 percent in 1983 to 36.7 percent in 2013. The share owned by the richest 20 percent rose from 81.3 percent to 88.9 percent over the same period.10 The top one-tenth of 1 percent (an estimated 160,000 households with net worth that starts at $20 million) now own more than 22 percent of all US household wealth in 2012, up from 7 percent in the 1978. This tiny subgroup—the true America
Hawkins Bay: The Freedom Bunker. This civil war will not be televised