For a Fairer America
What would Mark Twain make of America today? When he wrote his utopian satire, The Gilded Age (1873), there were certainly a lot of targets for his barbed shafts. The country worshipped gold, its politics were venal, and 1 percent of Americans sat on 20 percent of the nation's wealth. And they weren't shy about it, either. At a dinner in New York, by one account, guests smoked cigarettes rolled in hundred-dollar bills (about $2,000 today).
Yet, oddly, most Americans were better off than their parents had been. There were 5
Today, however, the wealth escalator doesn't work. In fact, while many families thought they were going up, they have actually been going down. In sectors of the economy where jobs could be mechanized or automated, tens of thousands now have no work. At the same time, most of the income gains we have reaped from productivity went to just the top 1 percent of Americans, who earned more than the bottom 50 percent-a degree of income disparity never before seen in America.
Feeling the squeeze. Since the 1970s, inequality of income and wealth has increased dramatically. In the 1980s and 1990s, middle-income families gained only about 10 percent in terms of after-tax income while the top 1 percent saw gains of 15 times that rate. Since 2000, a typical middle-class family has seen real household income rise less than 1 percent. Since the start of the current economic recovery, October 2001, median weekly earnings have fallen by 3.2 percent in real terms. Average hourly earnings for all nonmanagerial workers have also dropped, unlike in all previous recoveries. Today, as a result, we confront a situation in which economic growth no longer helps most American workers.
Increasing the squeeze, as documented in the seminal book The Two-Income Trap, is the fact that, for several decades, increases in income have fallen significantly behind increases in fixed costs for home mortgages, car payments, health insurance, and education. The income gains from having both parents work have been wiped out: The income from most two-parent families, in inflation-adjusted dollars, leaves them with less discretionary income than in the one-parent, single-paycheck family of the 1970s.
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