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American Dream Tarnished by Widening Wealth Gap
Published on Friday, January 24, 2003 by the Guardian/UK
American Dream Tarnished by Widening Wealth Gap
by Gary Younge
 

The disparity in wealth between rich and poor, as well as between whites and minorities has rocketed, according to a report by the United States Federal Reserve.

The difference in median net wealth between the top 10% income group and the bottom 20% leapt 70% between 1998 and 2001, the Fed announced in its consumer finances report. Meanwhile the gap between white and minority ethnic group Americans grew by 21%.

The figures will be an embarrassment to President George Bush's administration, coming the same week that Mr Bush set off around the country to try to sell his economic stimulus package.

The centerpiece of the plan is a cut in taxes paid on stock dividends, a move heavily criticized by Democrats for disproportionately benefiting the wealthy.

A poll in yesterday's Wall Street Journal yesterday showed that 49% of Americans disapprove of Bush's handling of the economy and 61% believe his proposals will not aid the recovery from recession. Other recent surveys show the country regards the economy as a greater priority than going to war with Iraq.

These new figures will exacerbate concerns about the degree to which disparate income levels are becoming entrenched. Last year, the number of Americans living below the poverty line increased by more than a million for the first time in eight years.

A recent study which compared the incomes and occupations of 2,749 fathers and sons between the 1970s and the 1990s concluded that social mobility was decreasing.

"What has happened in the last 25 years is that a large segment of American society has become more vulnerable," said Professor Robert Perrucci, who co-authored The New Class Society with Professor Earl Wysong. "Twenty years ago, going to college was enough. Now it has to be an elite school. The American dream is being sorely tested."

The Fed's figures describe net worth - the value of stocks, retirement funds, homes and other assets minus outstanding debts including mortgages.

The study showed that while the lowest income group saw their net worth grow by a quarter, the top 10% saw theirs rise by almost three times as much. Meanwhile net worth for white Americans rose 17% while it fell by 4.5% for those from the minorities.

The gulf between rich and poor had shrunk slightly between 1995 and 1998, when the economy was booming. The most recent study, which is published every three years, spanned the height of the boom in 1998 to the recession of 2001.

Alongside the widening gap there was evidence of a growing culture of share ownership. Almost 52% of families held stocks either directly or through mutual funds and retirement plans. This is the highest number since records began.

© Guardian Newspapers Limited 2003

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