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by Allan Lichtenstein

income-gapWITH ABOUT eight weeks before the presidential election, the conversation has changed radically from that heading into the Democratic Party’s convention a few weeks back. Many had hoped that Bernie Sanders “revolution” would pull the Democratic Party to the left, paving the way for a progressive agenda if Hillary Clinton is elected. As Clinton panders to the right to attract moderate (and not such moderate) Republicans, such optimism increasingly seems a pipe dream.

Neither Clinton nor Donald Trump speaks to the plight of the poor, and neither acknowledges the failures of neoliberalism. Donald Trump message resonates with a large section of the disaffected public — the white male working-age without a college education, in particular — but he offers no tangible economic program to resolve their plight. If anything, they are likely to suffer even more under a Trump presidency. Clinton claims to sympathize with the hardships of working Americans, but she has yet to disavow Wall Street with the conviction that would satisfy many on the left. Moreover, as an article in the New York Times recently noted, both Hillary Clinton and Donald Trump have said little about what they would do to help the poor in this country (see also my article in Jewish Currents).

As Barack Obama’s presidency closes, almost nine years have passed since the onset of the Great Recession in December 2007. The eighty-six months that have passed since its official conclusion in June 2009 represent the fourth longest expansion since the end of the 19th century, an expansion that has benefited the well-off and the rich and left the poor, working poor and middle class worse off or, at best, languishing.

 

LET ME OFFER a reminder of the key indicator of the huge disparities so prevalent in this country: the depth of income inequality, which rose again in 2015, despite income growth across the board. Not only is the concentration of income becoming more acute, but the income gains of the rich are approaching historic highs while the average income of the bottom 90 percent of families languishes below the level of 1979, which is when the inequality began to grow again.

The following draws entirely on the work of Emmanuel Saez, who together with Thomas Piketty has used income tax data to show the depth and breadth of income inequality.

Although the incomes of the 99 percent finally began to recover in 2015 from the losses of the Great Recession, the top 1 percent of families (with incomes above $443,000) increased their share of total income, capturing 22 percent of it. Overall, the top 10 percent of families (with incomes above $125,000 in 2015) held 50.5 percent of all income — more or less the equivalent of the previous peak of 50.6 percent in 2012, itself the highest on record since 1917.

With a real growth of 7.6 percent during the 2009-2015 economic expansion, the bottom 99 percent has recouped about sixty percent of the losses suffered in the Great Recession. The top 1 percent, on the other hand, with a real income growth over the same period of more than 37 percent, captured 52 percent of total real income growth.

Income Share of the Top 1 Percent: 1917 to 2015

income-chart-1Source: The World Top Incomes Database

Average real income (including capital gains) for the bottom 90 percent of families was 4 percent lower in 2015 than it was in 1979; just $34,074, which is only $10,000 greater than the poverty level for a family of four with two children under the age of 18 in 2015. In contrast, real income for the top 1 percent has grown by a whopping 183 percent since 1979, and for the top 0.1 percent by an even greater 305 percent.

Percent Change in Real Income since 1979 by Income Groups

income-chart-2Source: The World Top Incomes Database

Since 1979, as the income of the rich increased, the divide between the top and the bottom grew immensely. In 1979, the average income of the top 0.1 percent was 47 times greater than the average income of the bottom 90 percent. By 2015 the ratio was closing in on 200 times, more than four times the 1979 ratio. Similarly, the divergence between the top 1 percent and the bottom 90 percent has grown from 14 to 1 in 1979 to 40 to 1 in 2015, almost three times.

Ratio of Top 1 Percent and Top 0.1 Percent to Bottom 90 Percent

income-chart-3Source: The World Top Incomes Database

Unless attention is given soon to improving the lives of those left out of the economic expansion, the discontent of the disaffected public fed up with the elites may well be more severe in 2020. Donald Trump may not be the winner in 2016, but in 2020 another rightwing demagogue may well succeed.