By Cliff Montgomery – Oct. 26th, 2010
The wealthiest in the United States have seen a five-fold increase in their average incomes from 2008, even asthe Great Recession continues to destroy the jobs, life savings and home ownership of millions ofhard-working Americans, according to recently released government data.
“The 74 people who earned more than $50 million last year — the highest income category measured by theSocial Security Administration,” states DailyFinance in a story published today, “saw their average incomesskyrocket from $91.8 million in 2008 to a mind-boggling $518.8 million in 2009.”
These notorious 74 individuals earned about $10 million every week. By comparison, half of all U.S.wage-earners–around 75 million Americans–made less than $505 a week.
The figures were released on October 15th by the Social Security Administration.
The growing income inequality revealed by these figures was first pointed out by David Cay Johnston, a PulitzerPrize-winning journalist. Johnston won the award in 2001, while working for The New York Times.
Johnston recently revealed how we have gotten into such an economic mess:
“This systematic destruction of the working class and middle class has come during an era notable forcelebrating the super-rich just for being super-rich,” Johnston declared.
“From the Forbes 400 launch in 1982 and Robin Leach’s Lifestyles of the Rich and Famous in 1984 to thefaux reality of the multiplying Real Housewives shows, money voyeurism has grown in tandem with stagnant tofalling incomes for the vast majority.
“There has also been huge income growth at the top and the economic children of income inequality: budgetdeficits and malign neglect of our commonwealth,” added Johnston.
“This orgy of money exhibitionism has created a society in which commas – it takes three to be a billionaire -count more than character,” Johnston wrote.
“We have gone so far down this path that we [have] bailed out bankers, allowing them to keep the untaxedwealth in their deferral accounts and–with a few exceptions–retaining shareholder value, while wiping outinvestors in General Motors and Chrysler as a condition of their bailouts.
“And while autoworkers had to take severe pay cuts, bonus time on Wall Street is at new record levels,”Johnston wrote.
Though the total number of top earners fell last year from 131 to 74, their combined incomes grew to anastonishing $38.4 billion in 2009–up from a ‘mere’ $11.9 billion in 2008.
The names of the 74 top earners apparently were not revealed by the Social Security Administration, but “mostlikely [they were] Wall Street traders who earned bonuses or corporate executives cashing in deferredcompensation that accumulated over the years, or even highly paid athletes,” Bloomberg news service hasstated, citing Johnston.
Johnston explained in an email to DailyFinance that the ‘top 74’ does not include the majority of America’shedge fund managers, as their “investment” income normally is not considered a wage.
What does all of this mean to you? That matter can be determined by a chart Johnston has created which reveals the income disparity.
It shows income share changes over the last 60 years for the bottom 90 percent of wage earners–that is tosay, changes in that share of the nation’s wealth held by the overwhelming majority of Americans, the workingand middle classes.
In 1950, the bottom 90 percent of income earners held 64.44 percent of the nation’s wealth. By 1980, thatnumber had slightly moved upward, to 65.37 percent–a total increase of +0.93 percentage points.
The period from 1950 to 1980 entailed the glory years of Franklin Roosevelt’s “New Deal” policies, whichhelped manage an economy built on a strongly industrial and heavily unionized workforce.
Kevin Phillips, a former White House strategist for the Nixon Administration, clearly explained the issue in his2008 book, Bad Money: Reckless Finance, Failed Politics, And The Global Crisis Of American Capitalism.
“Over the last 30 years,” states the book cover to Bad Money, “financial services, including the ballooning debtand credit industry, have nearly doubled to a record 20 percent of the Gross Domestic Product [GDP], whilemanufacturing has halved to 13 percent, greatly imperiling the economy.”
Thus financial services “muscled past manufacturing…to become the largest sector of the U.S. privateeconomy,” wrote Phillips.
The result for average American citizens of a severely weakened industrial and unionized base? In 2008, thebottom 90 percent of income earners held only 51.77 percent of the nation’s wealth, according to Johnston’schart.
In other words, since 1980 a full 90 percent U.S. income earners have seen their share of America’s economicwealth drop by 13.59 percentage points.
An economic system which continually robs the working majority of its citizens to feed the wealthy few cannotlast.
