PSA for 1% enablers

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Generally speaking, wealth is the value of everything a person or family owns, minus any debts.

However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (see Wolff, 2004, p. 4, for a full discussion of these issues).

Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth. In addition, economists use the concept of financial wealth -- also referred to in this document as "non-home wealth" -- which is defined as net worth minus net equity in owner-occupied housing.

As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."
We also need to distinguish wealth from income. Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own.

In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income.

It's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details...



http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
Average Americans have been hit much harder than wealthy Americans.

Edward Wolff, the economist we draw upon the most in this document, concludes that there has been an "astounding" 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007.

By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%.

So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007. (See Wolff, 2010 for more details.) There's also some general information available on median income and percentage of people below the poverty line in 2010.

As might be expected, most of the new information shows declines; in fact, a report from the Center for Economic and Policy Research (2011) concludes that the decade from 2000 to 2010 was a "lost decade" for most Americans.

One final general point before turning to the specifics.

People who have looked at this document in the past often asked whether progressive taxation reduces some of the income inequality that exists before taxes are paid.

The answer: not by much, if we count all of the taxes that people pay, from sales taxes to property taxes to payroll taxes (in other words, not just income taxes).

The top 1% of income earners actually pay a smaller percentage of their incomes to taxes than the 9% just below them.



http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
In the United States, wealth is highly concentrated in a relatively few hands.

As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers).

In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%.


http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity.

The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate.

Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.





http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
Figures on inheritance tell much the same story.

According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance.

Another 1.1% receive $50,000 to $100,000.

On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000).

Thus, the attempt by ultra-conservatives to eliminate inheritance taxes -- which they always call "death taxes" for P.R. reasons -- would take a huge bite out of government revenues (an estimated $253 billion between 2012 and 2022) for the benefit of the heirs of the mere 0.6% of Americans whose death would lead to the payment of any estate taxes whatsoever (Citizens for Tax Justice, 2010b).



http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
It's even more revealing to compare the actual rates of increase of the salaries of CEOs and ordinary workers; from 1990 to 2005, CEOs' pay increased almost 300% (adjusted for inflation), while production workers gained a scant 4.3%.

The purchasing power of the federal minimum wage actually declined by 9.3%, when inflation is taken into account.



http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
Median compensation for CEO's in all industries as of early 2010 is $3.9 million; it's $10.6 million for the companies listed in Standard and Poor's 500, and $19.8 million for the companies listed in the Dow-Jones Industrial Average.

Since the median worker's pay is about $36,000, then you can quickly calculate that CEOs in general make 100 times as much as the workers, that CEO's of S&P 500 firms make almost 300 times as much, and that CEOs at the Dow-Jones companies make 550 times as much.


http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
There's a much deeper power story that underlies the self-dealing and mutual back-scratching by CEOs now carried out through interlocking directorates and seemingly independent outside consultants.

It probably involves several factors.

At the least, on the workers' side, it reflects their loss of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail in an excellent book by James Gross (1995), a labor and industrial relations professor at Cornell.

That decline in union power made possible and was increased by both outsourcing at home and the movement of production to developing countries, which were facilitated by the break-up of the New Deal coalition and the rise of the New Right (Domhoff, 1990, Chapter 10).

It signals the shift of the United States from a high-wage to a low-wage economy, with professionals protected by the fact that foreign-trained doctors and lawyers aren't allowed to compete with their American counterparts in the direct way that low-wage foreign-born workers are.



http://www2.ucsc.edu/whorulesamerica/power/wealth.html
 
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