US Census report: Inequality grew rapidly in 2018 to record levels
Social inequality in the United States is rapidly reaching unprecedented levels, according to US Census data published Thursday.
A large homeless encampment near downtown St. Louis [Credit: AP Photo/Jeff Roberson]
The past year saw a staggering transfer of wealth from the bottom 90 percent of the population to the top 10 and top 5 percent. This is the intended result of the bipartisan social counterrevolution intensified by Barack Obama and carried to a fever pitch by Donald Trump, who has slashed corporate taxes and regulations with no opposition from Democrats in Congress.
Census Bureau: Inequality “significantly higher” in 2018 vs. 2017
Over the course of just the last year, the poorest 20 percent of the country—some 65 million people—saw its share of aggregate income decline from 3.11 percent to 3.10 percent. The share of the second poorest quintile declined from 8.4 percent to 8.35 percent, while the third and fourth quintiles, representing those in the 40 to 60 percent and 60 to 80 percent range of incomes, declined from 14.29 to 14.21 and 22.63 to 22.53, respectively.
Only a very narrow section of the population benefited from this income redistribution. The wealthiest 5 percent obtained 96 percent of the income lost by the poorer quintiles, while the next wealthiest 5 percent (the richest 90 to 95th percentile) obtained the remaining 4 percent, meaning that even those in the 80 to 90th percentile saw their income share decline or remain stagnant.
This shifting of decimal points masks the real human impact of inequality on the lives of the entire working class. The new Census data will mean increasing deaths from opioids, alcohol and suicide, higher burdens of medical and student debt and unprecedented levels of work and family stress.
The Census Bureau reported that the national Gini coefficient—a measure of income and wealth distribution in which a value of 0.0 equals total equality 1.0 equals total inequality—was “significantly higher” in 2018 than in 2017, rising from 0.482 to 0.486, the highest ever.
According to World Bank figures, this makes the US as unequal as the Democratic Republic of the Congo and less equal than Kenya, Mexico and Malaysia.
Worlds apart: The bottom 90 percent and the top 10 percent
The wealthiest 10 percent continued to distance itself from the poorest 90 percent of the population. The income of a household at the 90th percentile was 12.60 times greater than the income of a household at the 10th percentile, up slightly from 12.59 in 2017. The income of a household at the 95th percentile was 9.72 times greater than a household at the 20th percentile and 3.94 times greater than a household at the 50th percentile, compared with 9.62 and 3.86 in 2017.
All of American bourgeois politics is geared toward satisfying the material needs of and working out the differences within the various elements of this privileged top 10 percent, whose interests are directly opposed to the great masses of people.
Bourgeois politicians from both parties—who are almost all personally wealthy—are sponsored by corporations and billionaire donors who control the political system. The corporate media sets the tone of political “discourse” and seeks to manipulate popular consciousness to protect the interests of the rich. Practically all discussion of the great social problems that confront the bottom 90 percent of the population are censored and kept out of sight.
The threshold required to reach the 95th percentile grew by $6,000 from 2017 to 2018, rising from $242,812 to $248,782. The percentage of the population making over $200,000 per year also increased substantially, from 8.1 percent in 2017 to 8.5 percent in 2018.
Census data relating to average income by occupation also reflects the increasing separation of the top 10 and bottom 90 percent of the population. Average incomes for chief executives increased from $134,656 in 2017 to $141,457 in 2018, for example, while incomes for lawyers rose from $125,125 to $129,365.
While incomes for many working class occupations rose slightly, the increases were almost always minimal or moderate.
In many cases, incomes at professions that number in the hundreds of thousands of people declined from 2017 to 2018. The average income of a telemarketer declined from $27,551 to $27,160 in the span of just one year. For example, incomes also fell for logging workers (from $36,091 in 2017 to $35,718 in 2018), roofers ($33,744 to $32,246), tire builders ($45,809 to $42,213), shoe and leather workers ($31,217 to $27,584), air traffic controllers ($91,982 to $79,647), ambulance drivers ($30,563 to $30,149), subway workers ($62,201 to $60,153), aircraft pilots and flight engineers ($110,765 to $110,636), and several more major occupations.
Even among those sections of the working class where incomes have risen slightly, the rising cost of living has greatly impacted the bottom 90 percent of the population.
There are now 10.08 million people who pay over 50 percent of their income on rent, an increase of 163,672 people from 2017 alone. The percentage of people paying over 35 percent of their income on rent rose from 37.5 percent in 2017 to 37.8 percent in 2018, impacting hundreds of thousands more.
These recent figures relate only to income and therefore understate the degree of inequality, which is best understood by calculating wealth. Income by occupation, for example, does not count the hundreds of thousands or millions of dollars which the affluent top 10 percent makes each year from investments, stock dividends, rent, and other parasitic forms of wealth accumulation.
Within-race inequality
Within each race, there was a noticeable increase in very affluent people, both in total numbers and as a percentage of the total within-race population. Among whites, the number of people making over $200,000 per year increased by 10.0 percent. Among Hispanics, the percentage increase was double—21.2 percent, while the number of African-Americans making over $200,000 increased by 16.5 percent.
These figures of within-race inequality expose the self-interested character of efforts by affluent sections of racial minorities to promote race as the central division in society. As the number of super rich within each race increase, substantial portions within each race live in acute financial hardship. A staggering 7.3 million African-American adults—49.2 percent of the total adult population—earn less than $40,000 in income. Some 6.3 million Hispanics and 23.7 million whites also earn less than $40,000 per year.
Among all sections of the working class, the Census data shows that incomes are becoming more homogenous across all strata. The ratio of a household income at the 80th percentile versus the 50th percentile decreased from 2.07 times greater to 2.06 times, while the ratio of an 80th percentile household income to the 20th percentile also declined from 5.15 to 5.08 times.
The ratio of the 20th percentile’s household income to the 50th percentile’s household income actually increased slightly, from .40 in 2017 to .41 in 2018, indicating that living conditions of the exact center of the income scale are more closely approaching the conditions faced by the poorest workers.
Inequality and the class struggle
It is not possible to comprehend the intense political crisis over Trump’s impeachment without taking into account the overwhelming influence of inequality on every element of American society.
Both the fascist Trump and the cabal of intelligence agents that directs the Democratic Party represent the interests of factions of the financial aristocracy whose primary disagreements are on the conduct of US imperialist foreign policy.
The explicitly narrow basis of the Democrats’ impeachment effort—limited to Trump’s thuggish efforts to force the president of Ukraine to dig up dirt on the Biden family’s corruption—makes clear that both factions are in agreement on tax cuts for the wealthy, near-zero interest rates to boost Wall Street, unprecedented spending on the military, and the xenophobic attack on immigrants and democratic rights.
Democratic presidential candidates like Bernie Sanders and Elizabeth Warren advance the utopian dream that the financial aristocracy will give-up its privileges and fund social programs when asked.
But history shows the only way to fight social inequality is through the class struggle.
Nearly 50,000 General Motors workers are presently engaged in a struggle against not only the corporation, but the UAW, which is conspiring with management to force through a contract that would intensify the growth of social inequality across industries and across the world. The fact that inequality has reached present levels is the product of the trade unions’ efforts to suppress the class struggle over the course of over 40 years.
The GM strike in the US and similar struggles by autoworkers in India, South Korea, Mexico, Brazil and elsewhere show the potential for ending the period of trade union-enforced social counterrevolution and for launching an international offensive for social equality. New, rank-and-file committees are required to allow workers to unleash their immense social power and redistribute trillions of dollars from the banks and corporations to meet the needs of workers worldwide.
How 2020 Democrats Are Missing the Message on the Economy
The candidates have yet to tackle the growing problem of regional inequality.
Doug Jones for Senate/Phil Roeder
The 2020 Democratic primary has seen no shortage of big, ambitious ideas—the nationalization of health care via “Medicare for All,” free college, free child care, and the cancellation of student debt, just to name a few.
But there’s one big idea still missing: how to fix the stark and growing disparities between the parts of the country that are prospering and those that are falling behind. Regional inequality is perhaps the greatest challenge to America’s economic and political future, but 2020 candidates have yet to tackle, let alone acknowledge, the problem. It’s an omission that could have long-term substantive consequences for Democrats.
Since President Donald Trump took office in 2016, numerous analyses have pointed to a widening gulf—political, economic and demographic—between red and blue America. On the one hand are the rising fortunes of educated, urban Democratic districts. On the other is the steep decline of formerly industrial, Republican districts in rural America and the heartland.
The latest to highlight this trend is a new report from Mark Muro and Jacob Whiton of the Brookings Institution, which underscores how deep this schism has become over the past 10 years.
When President Obama took office in 2008, Republican and Democratic districts enjoyed roughly the same median household income: $55,000 and $54,000, respectively. From an economic point of view, Obama’s famed 2004 declaration of national unity—“[t]here’s not a liberal America and a conservative America, there’s the United States of America”—was largely true.
Since then, median household income in Democratic districts soared to $61,000 in 2018, according to Muro and Whiton, while incomes in Republican districts fell to $53,000. The annual economic output of Democratic districts likewise skyrocketed, from $35.7 billion to $48.5 billion on average per district, while the economies of Republican districts shrank. The average Republican district’s GDP is now just two-thirds that of the average Democratic district’s GDP.
Several factors are driving this economic polarization, the first being an emerging duality in America’s economy. Democratic districts are now oriented toward high-growth, well-paid professional and knowledge economy jobs (think San Francisco, Chicago, and New York City), whereas Republican districts tend to rely on lower-growth or declining sectors such as manufacturing, agriculture, and mining (think rural West Virginia). “Not only do the two parties adhere to very different views, but they inhabit increasingly different economies and environments,” Muro and Whiton write. Professional and “digital services” jobs, for instance, account for 71 percent of jobs in Democratic districts and only 29 percent in Republican ones.
And while the share of adults with a bachelor’s degree or more was roughly the same in Democratic and Republican districts in 2008, Democratic districts are now significantly more educated: more than 35 percent of adults in blue districts have a four-year degree or more, compared to just one in four in red districts.
A second factor calcifying these trends is a sharp decline in both geographic and economic mobility. Americans once moved to where the jobs were, but this is no longer happening, largely because of high housing prices in high-growth areas and the lack of affordable access to higher education that can help workers’ marketability. The net result, as Benjamin Austin, Edward Glaeser and Lawrence Summers put it in a 2018 paper for the National Bureau of Economic Research, is the evolution of “durable islands of wealth and poverty.”
Certain regions have also compounded their advantages over time, adding to a “winner-take-all” dynamic that further exacerbates geographical economic divides. For instance, of the 6.8 million net new jobs created between 2000 and 2015, 6.5 million were created in the country’s top 10 percent of zip codes, according to the nonprofit Economic Innovation Group. Meanwhile, the nation’s bottom 10 percent of zip codes saw significant job losses.
These kinds of imbalances cry out for a policy agenda aimed at spreading economic opportunity more evenly across the country. But so far, the top contenders for the Democratic presidential nomination have stuck to universalist policy ideas like Medicare for All, while discussions of inequality have centered on race or class, but not on geography.
To be sure, a few candidates, including Vice President Joe Biden, have a “rural agenda” in their platforms. But the ideas encapsulated in them include relatively narrow default tropes like expanding broadband and helping family farmers. The one nod toward the disparate regional impacts of economic change is on trade policy, but there again, the prescriptions are less about creating new jobs than about posturing on China or regurgitating standard talking points bashing trade agreements. None of the candidates have put forth signature policy priorities that would rejuvenate the moribund economies of the industrial Midwest, or help heartland economies generate the kind of prosperity that their coastal neighbors enjoy.
The absence of a credible Democratic agenda on regional prosperity is one reason Trump has had free rein to exploit and magnify the economic discontent in large parts of the country for his political gain. As wrong-headed and destructive as his policies have been, his supporters can rightly say that Trump has at least acknowledged the significance of their economic decline.
Democrats shouldn’t continue to leave the field to Trump to romp at will.
For one thing, tariffs and border walls will not fix regional inequality; if anything, they make things worse. Americans in struggling parts of the country deserve better ideas, which Democrats are positioned to deliver.
As the Monthly’s Daniel Block has argued, the emerging geography of this divided America means Democrats must broaden their appeal and reach heartland voters if they want to win in 2020 and beyond. Democrats don’t have the luxury of writing off “flyover country” to rely solely on their base in major coastal cities.
Muro and Whiton point out that the newfound concentration of wealth in Democratic districts comes with a price: the geographic concentration of political power into increasingly dense districts. According to the two researchers, the land area controlled by Democrats has fallen by nearly half in the last 10 years—from roughly 39 percent in 2008 to just 20 percent in 2018, as the map below shows.
Superimpose a map of the electoral college in 2020 and two things immediately become clear. First, Democratic strongholds such as California, New York, and Illinois are nowhere near sufficient to deliver the 270 votes Democrats need to secure the White House. The University of Virginia’s Larry Sabato, for instance, counts 183 “safe” Democratic electoral votes so far.
Second, many of the swing states Democrats will need to win fall squarely within the “other America” in need of help. These states include the industrial upper Midwest—Wisconsin, Ohio, and Michigan—as well as Pennsylvania and Colorado. Four of these also happen to be states that Hillary Clinton lost in 2016.
Some liberals no doubt worry that nodding to the economic woes of blue-collar heartland America somehow validates the nationalism, MAGA-ism, and outright racism that Trump has unleashed. Nothing is further from the case. Reviving the heartland to help all Americans prosper is ultimately not about blue states versus red states, but about reviving the national project now in jeopardy.
Trump’s Economic Program Has Left Most Americans Worse Off
His tax cuts and tariffs are driving up prices and lowering wages.
The White House/Flickr
President Trump’s tax and tariff policies form the heart of an economic program that he’s promised will help average Americans. The hard data, however, show that he’s actually imposed substantial costs on about 70 percent of Americans.
That’s because of both the growing burdens imposed by both the tariffs and the tax changes that provided no relief to the nearly 43 percent of U.S. households that paid no income tax before, less than nothing to five percent whose taxes went up, and not much to an additional 22 percent of Americans whose small tax benefits are dwarfed by the negative income effects of Trump’s tariffs.
It may get even worse. If the president goes ahead in December with his plan to increase and expand tariffs on imports from China, 80 percent of the country—roughly 102 million households with 258 million people—will be worse off under his economic program.
The tariffs directly raise the prices for thousands of foreign and U.S.-made goods produced with Chinese or European parts. The U.S. companies that sell those goods lose some business; and as we pay more for some products, we have less left to pay for everything else. So, consumers cut back and businesses follow suit, forcing them and their suppliers to cut the hours their employees work or their jobs—setting off another round of cutbacks by households that squeezes more companies and workers. On top of all this, retaliatory tariffs on U.S. exports by China and the European Union trigger similar cutbacks by American companies and workers. His trade program dampens our Gross Domestic Product (GDP), loses jobs, and lowers incomes and wages.
For most Americans, those costs exceed any savings they can incur from the president’s tax changes. It’s a reminder of just how dramatically his tax program favors the high-income bracket. To begin, 42.7 percent of “tax-paying units” (households and spouses filing separately), covering 154 million people in 2018, got little or nothing from Trump’s tax cuts, because their incomes were too small to trigger income tax liability before those changes. Trump’s decision to cap people’s deductions for their state and local taxes also turned his tax program into a tax increase for five percent of households, living mainly in high-tax blue states.
Additionally, the 2017 tax changes provide so little for the lower 40 percent of tax-paying households that Trump’s tariffs wind up swamping those meager tax benefits. Across the bottom quintile, or 20 percent of taxpayers, the tax benefits averaged just $60 per-household in 2018, and the benefits for the next 20 percent of taxpayers amounted to $380. Trump’s tariff program costs the average household an estimated $690 in foregone income.
That estimate is based on the Tax Foundation’s calculations that Trump’s current tariffs have shaved $62.5 billion per-year from our GDP, and that foreign tariffs imposed in retaliation cost our GDP another $25.6 billion. GDP may just be a particular way of measuring the value generated by the economy, but almost all of it ultimately translates into people’s incomes.
The rest is arithmetic. Trump tax changes such as the expanded standard deduction did raise the share of households whose incomes are below the threshold for the federal income tax from 42.7 percent to 44.4 percent. That leaves 55.6 percent of households paying some income tax in 2018, so each 20 percent of them represent 11.1 percent of all U.S. households. So, the president’s economic program has cost another 11.1 percent of tax-paying households $630 in 2018. An additional 11.1 percent will pay $310 more in 2018.
There are also the 42.7 percent of households with incomes too low to trigger any income tax liability before Trump’s tax changes and the five percent who saw their taxes go up under those changes. Both of those groups bear the full $690 net costs from his tariffs. Adding it all up, Trump’s economic policies have imposed significant net costs on 69.9 percent of American households, or roughly 89.2 million households with 226 million people. What’s more, the ripple effects of Trump’s tariffs cost Americans in other ways. Using Tax Foundation data, his tariffs—and retaliation by our trading partners—have cost the economy 272,864 jobs and dampened people’s wages by $25.6 billion or $246 per working household. Moreover, tariff payments by U.S. business jumped $35.7 billion from 2016 to 2018. Economists expect that almost all of those payments are passed along in higher prices. Even if U.S. businesses pass along just three-fourths of those payments, Trump’s tariffs have directly cost an average household $282 in higher prices for goods and commodities.
And, if Trump carries out his threat to double down on his tariffs this winter, the annual impact on GDP will nearly double from $88.1 billion to $167.8 billion. As that lost GDP results in lower wages and incomes, Trump’s tariffs will cost the average household an estimated $1,315. At that rate, those costs will overwhelm the $930 in average tax savings claimed by the third income quintile of taxpayers, adding another 11.1 percent of households to the 69.9 percent who already are net losers. When the president asks voters for another four years, he will have to explain how his signature economic policies have left the vast majority of them worse off.
Opinion: A call to philanthropy to help all Californians rise
State economy may be thriving, but not all Californians are sharing in that prosperity
California’s economy is thriving, but not all Californians are sharing in that prosperity. Inland California, which stretches from Sacramento to Stockton through Fresno, Bakersfield, and the Inland Empire, contributes 17 percent of California’s economic output – but faces more than its fair share of poverty, unemployment and opportunity gaps.
Philanthropic giving mirrors those trends. California’s Bay Area has 20% of the state’s population and receives 53% of its philanthropic dollars, while the San Joaquin Valley is home to 11% of the state’s population and receives just 3% of its nonprofit dollars. Similarly, the Inland Empire accounts for 11% of California’s population but receives just 1% of the state’s nonprofit dollars.
If you’re a philanthropist investing in housing for the 59,000 people on our Los Angeles streets or services for the homeless in San Francisco, you might be wondering what these problems have to do with you. The answer is, everything. The fates of our communities are intertwined. As people migrate inland in pursuit of more affordable living, philanthropy must recognize the opportunity to truly build a California for all.
Bay Area organizations like Hamilton Families, are rehousing homeless families as far away as Sacramento and Fresno to address the skyrocketing need. We must ensure that jobs, supportive services, and affordable housing follow. If we don’t, we are just busing people out and passing big problems down the road, instead of building communities of choice where people can thrive.
In this spirit, Gov. Gavin Newsom is leading a “Regions Rise Together” initiative to support economic development, land use, and transportation in communities that have been left behind. Some influential investors are already redefining the philanthropic landscape. Philanthropy California has guided grant-making organizations across the state toward funding opportunities in San Joaquin Valley and the Inland Empire. The James Irvine Foundation and The California Endowment are increasing nonprofit capacity throughout the Central Valley and Salinas.
Philanthropy is critical to catalyze government dollars. The city of Stockton leveraged The Spiegel Family Foundation’s $20 million donation to launch Stockton Scholars, double the number of counselors in Stockton Unified School District and align its graduation requirements with the CSU/UC system. This catalytic investment triggered a $2 million commitment in the state’s 2019 budget to produce a feasibility study for a Cal State University in Stockton, which would create more than 2,000 local jobs and generate more than $250 million to Stockton’s local economy.
Philanthropic investments also help test new ideas. With support from the Economic Security Project, Stockton launched SEED, the nation’s first mayor-led guaranteed income pilot. In February, SEED began giving 125 low-income residents $500 a month for 18 months. This partnership helped transform universal basic income from a fringe idea to a viable policy solution that could help lift people out of poverty throughout our state.
Environmentalists also need to look Inland. Forty percent of emissions in our state are from vehicles. With lack of affordable housing “super-commuters,” those travelling 90 minutes or more to work every day, are on the rise. We must marshal every available resource – from state climate resilience programs to directing social capital into new businesses, green infrastructure, and housing through Opportunity Zones — if we want to create local jobs and healthier outcomes.
Californians must start thinking beyond their own backyard. Philanthropy’s nimble capital, local government’s knowledge, and the nonprofit sector’s trust must be deployed together to empower those who have been left behind. If we continue to operate in silos, the gaps between us will continue to grow. If we work together, all Californians can rise.
Michael D. Tubbs is mayor of Stockton. Kathleen Kelly Janus is senior advisor to Gov. Gavin Newsom on social innovation.
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