If you’re anything like the average American, you most likely could check the banking app on your phone or from your computer and find anywhere from $2,500-4,400. But if you are part of the top 1% of this country’s economy, you might be looking back at a number with a few more zeros tacked on the end.
The problem that solving for averages is that the incredibly high values associated with more wealthy families/individuals often skew the data. These are called outliers, and my statistical models automatically eliminate them for predictions and projections, simply because they do more to distort the data than accurately represent it. While your average American has an income of around $50,500 and a practical net worth of around $180,000, the mathematical average of a family’s net worth is somewhere around $710,000 ($81.8 billion in total American household wealth divided by the 115,226,802 American households.)
- America’s 20 wealthiest people own more than the 152 million people that make up the bottom 50% of the population.
- The 400 richest Americans own as much wealth as 36 million average American families.
- The 100 richest Americans have as much accumulated wealth as the entire African-American population, or 41.7 million people.
Looking at this chart is, for lack of a better word, disturbing. If the entire population of the United States was represented by 100 citizens, the statistics show that 1 man out of that 100 would have 1/3 of the country’s wealth, land, and capital.
Although it might be surprising to actually see these figures and facts for yourself, this issue is not a recent one. Over the past four decades, a select few have been attempting to ring the alarm and wake up the rest of us.
Our society today, for all its advancements and progress, has remained relatively stagnant in one incredibly important way. The gap between the rich and the poor has risen exponentially while our quality of life has only increased just enough to keep us complacent.
How did this happen? Why did this happen?
From 1965 to 2014, the average CEO’s yearly compensation compared to his/her average worker increased from 20-1 to its current ratio, 303-1. Executives and boardroom types have always earned more than their employees and most could rightly argue that they should…but the disparity that now exists between the two is nearly impossible to comprehend. While these high position types do require special skills and qualifications, it would be difficult to justify the enormous difference that is now commonplace in corporate America.
This ridiculous wage increase, in combination with lowered tax rates, tax loopholes, subsidies, and the exploitation of cheap international labor forces, has shifted the vast amount of wealth that is created into the pockets of a very select few. On top of this, these select few are likely to hoard and store their money away instead of spending it. This allows these investments to accumulate an incredible amount of interest while, at the same time, pulling valuable capital from the economy.
Now, if the average employee’s wage had been allowed to keep up with the uptick in top-tier income and production then the argument over wealth inequality in America would be far less crucial than it has become. But it just hasn’t. The average American’s wage has risen just enough to be able to keep food on the table, put clothes on his/her children’s backs, and allow for a biannual family vacation—if they’re lucky.
Our politicians speak about raising the quality of life, they say that we all deserve a good and happy life, full of the best and most fulfilling things that our society and our economy has to offer. But in the past few decades, while they might be sincere in their wishes for these things, their actions have been less than promising.
What happens when employees work longer hours for lower pay? What happens when a mother or a father can’t afford to buy their children the gifts they want to? What happens when all of the modern conveniences we have been fortunate enough to see come to fruition are no longer affordable?
The truth is, lots of things happen, and not a whole lot of them are very good.
Is It Too Late To Turn This Around?
After over 40 years of going in what most would argue is the wrong direction, it will be extremely difficult to fix what has happened to our broken economic system. However, extremely difficult does not mean impossible. Through honest discussion, transparent legislation, and meaningful change, the clock can be wound back and the majority of country, for the first time in decades, will be on the path to prosperity.
Much of the information in this article was gained from a report recently released from the Institute For Policy Studies that can be read in detail here.
David Stansberry is an intern contributor and student at Middle Tennessee State University majoring in Economics and English. He enjoys Star Wars, stand-up comedy, JFK conspiracy theories, and Krispy Kreme doughnuts.