Read time: 2 minutes

Landmark Study: A Much Bigger Income Shift To Top 1% Than Anyone Thought

“There is no way of slicing the numbers where people come out ahead,” says Carter Price, a senior mathematician at RAND, who co-authored the RAND Corporation study.

A new analysis by the RAND Corporation examines what rising inequality has cost Americans in lost income—and the results are even bigger than expected. It also answers the questions many Americans have about why they're running so hard to get ahead, and are still falling behind. Via Fast Company:

A full-time worker whose taxable income is at the median—with half the population making more and half making less—now pulls in about $50,000 a year. Yet had the fruits of the nation’s economic output been shared over the past 45 years as broadly as they were from the end of World War II until the early 1970s, that worker would instead be making $92,000 to $102,000. (The exact figures vary slightly depending on how inflation is calculated.)

The findings, which land amid a global pandemic, help to illuminate the paradoxes of an economy in which so-called essential workers are struggling to make ends meet while the rich keep getting richer.

“We were shocked by the numbers,” says Nick Hanauer, a venture capitalist who came up with the idea for the research along with David Rolf, founder of Local 775 of the Service Employees International Union and president of the Fair Work Center in Seattle. “It explains almost everything. It explains why people are so pissed off. It explains why they are so economically precarious.”

Notably, it isn’t just those in the middle who’ve been hit. RAND found that full-time, prime-age workers in the 25th percentile of the U.S. income distribution would be making $61,000 instead of $33,000 had everyone’s earnings from 1975 to 2018 expanded roughly in line with gross domestic product, as they did during the 1950s and ’60s.

Hanauer and Rolf fingered the specific causes:

They say the blame lies, in large measure, with decades of failed federal policy decisions—allowing the minimum wage to deteriorate, overtime coverage to dwindle, and the effectiveness of labor law to decline, undermining union power. They also cite a shift in corporate culture that has elevated the interests of shareholders over those of workers, an ethos that took root 50 years ago this week with the publication of an essay by University of Chicago economist Milton Friedman.

Many of these developments, Rolf points out, have been driven by the belief that an unfettered free market would generate wealth for everyone. Thanks to the RAND study, he says, “we now have the proof that this theory was wrong.”

I can't believe there are still people who revere Milton Friedman. He's done irreparable harm to working people in America.

Can you help us out?

For 16 years we have been exposing Washington lies and untangling media deceit. We work 7 days a week, 16 hours a day for our labor of love, but with rising hosting and associated costs, we need your help! Could you donate $20 for 2020? Please consider a one time or recurring donation of whatever amount you can spare, or consider subscribing for an ad-free experience. It will be greatly appreciated and help us continue our mission of exposing the real FAKE NEWS!

More C&L Coverage

Comments

We welcome relevant, respectful comments. Any comments that are sexist or in any other way deemed hateful by our staff will be deleted and constitute grounds for a ban from posting on the site. Please refer to our Terms of Service (revised 3/17/2016) for information on our posting policy.