America’s economy has almost doubled in size over the last four decades, but broad measures of the nation’s economic health conceal the u...
America’s economy has almost doubled in size over the last four decades, but broad measures of the nation’s economic health conceal the unequal distribution of gains. A small portion of the population has pocketed most of the new wealth, and the coronavirus pandemic is laying bare the consequences of the unequal distribution of prosperity.
Inequality didn’t cause the coronavirus crisis. But it is making the crisis much worse, having created an economy in which many Americans are struggling to get by, and are vulnerable to any interruption of work or income and any illness.
On this page, we present dozens of ways to look at American life that together provide a more meaningful picture than G.D.P. There is reason to expect that many of these indicators are already beginning to look worse, as the country grapples with both a pandemic and a recession. Together, they also help show the areas in which Americans will struggle to recover from this crisis.
Incomes have stagnated. But not for the rich.
One way to think about the rise in inequality is to imagine how different the economy would be if inequality hadn’t soared over the past 40 to 50 years. In that scenario, with the same G.D.P. that we have today but with 1980 levels of inequality, every American household in the bottom 90 percent of income would be earning about $12,000 more — not just this year, but permanently.
In effect, each household in this bottom 90 percent is sending a check for $12,000 to every household in the top 1 percent, year after year after year.
Since Jan. 1, 2011, a family in the bottom 90 percent has effectively given the rich ...
$110,630.14
The stagnation of income for most Americans has caused a sharp decline in arguably the most salient definition of economic progress: Do you earn more than your parents did at the same age?
The answer was yes for 92 percent of Americans born in 1940. Even if they had to cope with unemployment, divorce, illness or another financial challenge, almost all grew up to out-earn their parents (controlling for inflation). Among Americans born in 1980, however, the share was only 50 percent. Living the American dream is now akin to a coin flip.
Born in 1940? You would almost definitely
make more than your parents.
Chance of making more than your parents if born in...
1940
92%
1950
79
1960
62
1970
61
1980
Born in 1980? You only had a 50-50 chance of making more than your parents.
50
Source: “The Fading American Dream: Trends in Absolute Income Mobility Since 1940” (See notes)
Another way to see how inequality has skyrocketed: The changing ratio between the pay of C.E.O.s and the pay of typical workers:
Executive pay packages
have skyrocketed
CEO-to-worker compensation ratio
300
200
100
0
1970
1980
1990
2000
2010
Source: Economic Policy Institute
Over this same period, taxes on the wealthy have also fallen much more than for any other group.
Boomers are richer. The rest are poorer.
The trends on wealth are, if anything, starker.
In 2016 the median American household had a lower net worth — about 30 percent lower — than the median household in 2007. How could this be, given the bull market during much of that period? The answer is that most Americans own little or no stock. Their main asset is their home.
Boomers have accumulated more than half of all household wealth
Share of household wealth, by age of generation's median cohort
Baby Boomers
50%
40
30
20
Generation X
10
Millennials
0
5
10
15
20
25
30
35
40
45
50
55 years old
Source: Federal Reserve, based on work by Gray Kimbrough
The affluent, of course, do tend to own stock, and the median net worth of the richest 10 percent of households rose 13 percent from 2007 to 2016 (the last year for which the Fed has released data).
Those with the most wealth saw gains since 2007
Change in net worth over 2007-2016, by percentile
90th percentile of net worth
+13%
-15
75th percentile
-30
Median household
-37
25th percentile
Everyone else is worse off
Source: Federal Reserve Survey of Consumer Finances
The trends are similar over the long term.
Whose net worth increased the most? The rich
Change in median net worth since 1989
Richest 10%
80%
60
40
20
All families
0
-20
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Note: 2016 dollars. Source: Kaiser Family Foundation
Overall, the richest 0.1 percent of American households own 19.6 percent of the nation’s total wealth, up from 15.9 percent in 2005 and 7.4 percent in 1980. The richest 0.1 percent now have the same combined net worth as the bottom 85 percent.
The wealth trends have been especially hard on younger Americans. The median net worth of Americans under age 35 — who started off substantially poorer on average than older Americans — is 40 percent lower than the net worth of Americans under 35 was in 2004. The net worth of Americans over age 65, by contrast, has risen 9 percent over the same period. The Boomers, in short, are richer than their predecessors, and Millennials and Generation X are poorer than their predecessors.
No generation has seen their net worth grow quite like older Americans
Change in median net worth since 1989
65 and
older
+50%
55–64
0
<35
45–54
35–44
-50%
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Younger Americans have less wealth than in the past
Source: Kaiser Family Foundation
Racial inequities have also widened. The median wealth of white households is now 10 times higher than the median wealth of black households. In 1992, the multiple was seven to one.
White Americans have seen their net worth climb
Median net worth
White non-Hispanic
$150K
100
But it’s barely budged for black Americans
50
Black non-Hispanic
0
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Note: 2016 dollars. Source: Kaiser Family Foundation
The rich live longer than the rest.
The trends in health and life expectancy are also deeply worrisome.
Rich and poor Americans used to have fairly similar lifespans. Now, however, Americans in the bottom fourth of the income distribution die about 13 years younger on average than those in the top fourth.
Life expectancy has actually fallen for some lower-income Americans
Life expectancy at
age 50 among men
Born in 1930
Born in 1960
Lowest income
But the rich added more than seven years
Low
Middle
High
Highest income
75 years old
80
85
90
Life expectancy at
age 50 among women
Born in 1930
Born in 1960
Lowest income
Rich women can expect
to live over 90
Low
Middle
High
Highest income
75 years old
80
85
90
Source: The National Academies of Sciences, Engineering, and Medicine
No other rich country has suffered such slow growth in life expectancy. In 1980, Americans lived roughly as long as the British and French did. Not anymore:
Life expectancy at birth
Japan
84
Italy
Switzerland
France
Canada
82
Germany
80
United States
78
China
76
Brazil
Saudi Arabia
74
The United States spends more on health care than any other country, but the life expectancy is falling
72
Ukraine
Russian Federation
70
India
68
66
Health expenditure per capita
Gabon
Marshall Islands
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
$10,000
Afghanistan
Papua New Guinea
Congo, Rep.
Note: Current health expenditure per capita, purchasing power parity, reflects current international dollars. Both measures span 2000-2017. Source: World Bank
One cause: The uniquely expensive and inefficient medical system in the United States. Treatments, procedures and drugs all cost more than in other countries. Those premiums lift the incomes of companies and people in the health care sector, but they come at the expense of other Americans.
Low-income Americans are less
likely to have health insurance
Share without health insurance, by income
<$20k
22%
$20k - $40k
22
>$40k
9
Share without health insurance, by education
Less than high school
30%
High school
17
Some college
11
College graduate
5
Same for people who didn’t
graduate from high school
Source: Kaiser Family Foundation
Another reason for the widening gap is “deaths of despair” — from suicide, alcoholism and drug abuse. The rate of these deaths among American adults (ages 25 to 64) without a four-year college degree has nearly tripled since the early 1990s. More now die from these causes than from cancer.
For Americans with a college degree, the “deaths of despair” rate has risen only modestly over the same period — and is now less than one-fourth as high as it is for people without a degree.
Those without a college
degree die more often from
“deaths of despair”
They also drink more
than college grads
Average number of drinks (on days when
drinking) among non-Hispanic whites
aged 45-54
“Deaths of despair” per 100,000
non-Hispanic whites aged 45-54
Non-
college
2.5
100
2.0
50
1.5
College
grads
0
1.0
1992
2016
1994
2016
Source: “Deaths of Despair and the Future of Capitalism” by Anne Case and Angus Deaton.
Smoking rates have fallen much more for the affluent than the poor. Only 7 percent of adults with income above $100,000 smoke. About 14 percent of adults with income between $35,000 and $100,000 smoke, as do 21 percent with income below $35,000.
Who still smokes? Mostly those with lower incomes
Smokes “every day” or “some days”, by household income
<$35k
21%
$35k–75k
15
$75k–$100k
13
>$100k
7
Source: Centers for Disease Control and Prevention
Daily life has also become significantly harder for Americans on the wrong side of the class divide. The chronic-pain gap has widened, with about 60 percent of adults without a college degree experiencing neck, back or joint pain.
Those without a college degree say they feel more pain
Share of non-Hispanic whites aged 45-54
experiencing neck, back or joint pain
Non-college
60%
50
College grads
40
30
1998
2016
Source: “Deaths of Despair and the Future of Capitalism” by Anne Case and Angus Deaton.
And a larger share of Americans — especially men — are not working than in the past. Many of them aren’t looking for work, which means they aren’t counted as officially unemployed. The group includes former factory workers who have not been able to find decent-paying new jobs.
A smaller share of men are working today
Work force participation, individuals aged 25-54
100%
Men
80
Women
60
40
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
Source: Federal Reserve Bank of St. Louis
The decline of labor unions plays a role in many of these trends. Without collective bargaining, many workers struggle to receive wages that keep up with the growth of their company’s profits. Many also feel less connected to their company and to their colleagues than they once did.
Union membership rates of employed wage and salary workers
20%
15
10
Union membership
has plummeted
5
0
1990
2000
2010
Source: Bureau of Labor Statistics
Family life has diverged
A greater share of children in the United States live with only one parent — 23 percent — than in any other country.
Nearly a quarter of American kids live in single-parent homes
Share of children under age 18 in single-parent households
United States
23%
United Kingdom
21
Russia
18
Sweden
18
Denmark
17
France
16
Netherlands
16
Source: Pew Research Center
The trend has been driven mostly by the rise of single-parent families among the middle class and poor.
Mothers with a bachelor’s degree are far more likely to be married
Children in married households, by mother’s level of education
90%
Mother had a
bachelor’s degree
80
High school or
some college
70
Less than
high school
60
1980
1985
1990
1995
2000
2005
2010
2015
Source: IFS
About 77 percent of upper-income Americans between the ages of 25 and 55 are married. Only 29 percent of low-income Americans are.
Make a lot of money? You’re far more likely to be married
Share married, by income level
High income
77%
Middle
58
Low income
29
Source: American Community Survey, 2018
Educational outcomes have diverged too
There has been a surge of college-going among children from all economic groups over the last few decades. But there has not been a surge in the share of lower- and middle-income students who graduate from college.
Many of those who fail to finish college end up with the miserable combination of student debt and no degree. The number of higher-income students who finish college, however, has risen sharply.
Wealthy students are more likely to graduate
Share with degrees, by income quintile
60%
Highest income
40
High
Middle
20
Low
Lowest income
0
Born in 1970
Born in 1980
But that number has barely changed for lower-income students
Source: Fabian Pfeffer, “Growing Wealth Gaps in Education,” the journal Demography.
Research has consistently shown that the benefits of college — in terms of income, health and happiness — are large, but that those benefits accrue overwhelmingly to graduates rather than to people who merely earn some credits.
One reason for the growing inequality in college graduation has been sharp cuts in states’ spending on higher education. These cuts have left colleges with fewer resources and also led to big tuition increases, even after taking financial aid into account.
Net college price (tuition, fees, room and board)
$15.4k
$15k
College is only getting
more expensive
10
5
0
1992
‘94
‘96
‘98
2000
‘02
‘04
‘06
‘08
2010
‘12
‘14
‘16
‘18
2020
Note: For public four-year in-state colleges. Source: CollegeBoard
Given all of this, it makes sense that so many Americans have soured on their own country. For almost 20 years, through economic booms and busts and through presidencies of both parties, most Americans have said the country was headed in the wrong direction.
They’re right about that.
Majority of Americans think the country is on the wrong track
"All in all, do you think things in the nation are generally headed in the right direction, or do you feel things are off on the wrong track?"
75%
Wrong track
50
Right
direction
25
Mixed
Unsure
0
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Note: Chart excludes other answers. Source: NBC News/Wall Street Journal
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