America Is Richer Than Ever. Don't Tell the Poor.
Five years after the lowest depths of the recession, America has finally regained all of the jobs that we lost in that economic calamity. In absolute terms, America has never been richer. Now we can turn our attention to equality.
Remember early 2009? Economic hell. And now? The USA is booming. Booming, I tell you! From the Wall Street Journal:
The net worth of U.S. households and nonprofit organizations—the value of homes, stocks and other assets minus debts and other liabilities—rose roughly 2%, or about $1.5 trillion, between January and March to $81.8 trillion, the highest on record, according to a report by the Federal Reserve released Thursday.
That's right—our nation's collective wealth (at least as we currently measure it, although love is the most valuable thing of all) now stands at its highest point in history. This fact also reveals another, equally important fact: our nation is not one in which economic growth necessarily alleviates poverty. Neil Irwin has a great piece explaining this dilemma. From the late 1950s until the mid-1970s, economic growth in America was accompanied by a decline in the poverty rate. Then, those two measurements decoupled. Throughout the 1980s and up to the present day, the economy continued to grow, but poverty stopped declining as that happened. This roughly coincides with the overall post-Reagan era rise in economic inequality in America. At the same time, the social safety net that we offer to the poor has been eroding. From Irwin:
If you are committed to the idea that poor families need to work to earn a living, this has been a great three decades. For households in the bottom 20 percent of earnings in the United States — in 2012, that meant less than $14,687 a year — the share of income from wages, benefits and tax credits has risen from 57.5 percent of their total income in 1979 to 69.7 percent in 2010.
And to top it all off, wages have barely risen at all for those at the bottom of the economic pyramid during the past 30 years. All of this has combined to produce what we have today: the richest America in history, with a hugely disproportionate share of the wealth gains going to the very rich, and with the non-rich stuck with barely any gains from that economic growth—not to mention less help from their own government.
This is the short version of why America needs strong taxes on the rich and in order to somewhat even out our rampant inequality. Otherwise, it will continue to grow. And that never ends well.