Recent reports from the Congressional Budget Office (CBO) have shown that the top 1% keep getting richer over the years. The middle and lower classes, however, haven’t been so lucky.
Stated the CBO report:
“Over the past three decades, the distribution of income in the United States has become increasingly dispersed — in particular, the share of income accruing to high-income households has increased, whereas the share accruing to other households has declined.”
The report found that for the 1% of wealthiest Americans, the average inflation-adjusted household income grew by 275%. The rest of wealthiest 1/5th of the population, (not including the top 1%), saw household income grow by 65% during that time, far faster than the rest of the population. And the poorest people in America, the bottom 1/5th, have only seen an 18% increase over the past 30 years.
Yes, a 275% increase of annual income in the already richest 1% of the population compared to the 18% increase for the poorest segment of the population. How on Earth did this happen?
The CBO report offered some explanation:
“The rapid growth in average real household income for the 1% of the population with the highest income was a major factor contributing to the growing inequality in the distribution of household income between 1979 and 2007. Shifts in government transfers and federal taxes also contributed to that increase in inequality.”
Others point to the fact that climbing the economic ladder– a.k.a. the American Dream– has becoming increasingly difficult.
Perhaps one of the best qualities about U.S. society has been lost. Recent research indicates that Americans are less economically mobile than ever. Could it be? The the land of opportunity, where rags-to-riches stories make up our citizenry’s landscape is on the verge of extinction?
Occupy Wall Street seems to have shown a spotlight on the issue. With an emphasis on the “we are the 99%”, it has become painfully clear that the disparity between the rich and wealthy has reached extreme levels. But does that mean that mean the possibility for a Jefferson ‘s experience of “movin’ on up to the East side” is no longer within the average Americans reach?
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Jason DeParle thinks so. Back in January the journalist penned an article for the New York Times entitled “Harder for Americans to Rise from Lower Rungs“. In it he argues that the evidence for America’s lack of economic mobility is staggering:
“A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) — a country famous for its class constraints.”
The study also found that 62% of men and women raised in the top 5th of incomes stay in the top 2/5ths. Likewise, 65% of men and women born in the bottom 5th stay in the bottom 2/5ths. This lack of mobility is not shared by Canada and Western European countries.
Between unfair taxation and a less mobile society, it’s no wonder that the rich keep getting richer.