Americans now work more than citizens in any other industrialized country, and the average American’s income has barely risen in the past 10 years. Nonetheless, mainstream coverage of the economy seems to suggest that we are all rolling in money.
According to the Economic Policy Institute, median family income only rose about $300 in the last 10 years, after adjusting for inflation. Since the 1970s, 90 percent of all income growth has gone to the top 1 percent of families.
When reading the newspaper or watching television, though, it seems as if the economy has been great for everyone. We hear constantly about the stock market continuing its climb to unimagined heights. The few who have profited from the Internet are often featured in magazines and television news as evidence that anyone can succeed.
However, the truth is the booming economy has not benefited the average American. In 1993, the richest 1 percent of families owned a shocking 40 percent of the nation’s wealth, while the bottom 80 percent owned only 16 percent. Overall, 20 percent of Americans own 82 percent of everything.
For those lucky individuals, the growing economy has indeed been a boon. The average chief executive officer now makes 419 times more than the average factory worker. In 1980, it was only 42 times more. To put it in perspective, if everyone’s income had risen equally, the average assembly line worker would now make more than $100,000 per year — but instead makes less than $30,000.
Looking at more typical people, the differences become even more stark. The top fifth of Americans saw their incomes rise about $15,000 from 1990 to 1997. The bottom fifth saw a $37 increase.
Although the stock market has had unprecedented growth, that growth disproportionately helped those who were already wealthy. Most Americans do not own any stock, and of the few families who do, their holdings are very small. Only extremely well-off people can afford to buy thousands of shares and truly benefit from the stock market’s growth. The Economic Policy Institute’s study shows about 85 percent of the stock market’s gains went to the richest 10 percent of households.
Finally, the average American family is getting deeper into debt. The bottom 40 percent of families have more debt than assets. Last year, the personal savings rate for Americans was negative — we not only spent more than we saved, we spent more than we earned. High interest payments eat up any minute increase in income, and the average family is not better off than they were in 1979.
The booming economy has certainly been good to some, but for the vast majority of Americans the last decade has been nothing to write home about. The only change has been that media coverage has made us feel better off. Unless you started off the decade already in the top 20 percent, the 1990s probably didn’t benefit you financially. The media needs to stop focusing on the few who have seen gains from the economy and start examining the huge numbers of Americans who have not benefited at all.