5
#000000
#FFFFFF
inequality
3 Ways Rising Inequality Has Weakened US Democracy
The class-based inequalities exacerbated by the Trump bill are not new. Rather, they are part of a 50-year trend linked to social cleavages, political corruption, and a declining belief in the common good.
Jul 14, 2025
America has never been richer. But the gains are so lopsided that the top 10% controls 69% of all wealth in the country, while the bottom half controls just 3%. Meanwhile, surging corporate profits have mostly benefited investors, not the broader public.
This divide is expected to widen after President Donald Trump’s sweeping new spending bill drastically cuts Medicaid and food aid, programs that stabilize the economy and subsidize low-wage employers.
Moreover, the tax cuts at the heart of the bill will deliver tens of billions of dollars in benefits to the wealthiest households while disproportionately burdening low-income households, according to analyses by the nonpartisan Congressional Budget Office and Joint Committee on Taxation. By 2033, the bottom 20% will pay more in taxes while the top 0.1% receive $43 billion in cuts.
I am a sociologist who studies economic inequality, and my research demonstrates that the class-based inequalities exacerbated by the Trump bill are not new. Rather, they are part of a 50-year trend linked to social cleavages, political corruption, and a declining belief in the common good.
The Roots of Class-Based Inequality
The decades following World War II were broadly prosperous, but conditions began changing in the 1970s. Class inequality has increased enormously since then, according to government data, while income inequality has risen for five decades at the expense of workers.
Economists usually gauge a country’s economic health by looking at its gross domestic product as measured through total spending on everything from groceries to patents.
But another way to view GDP is by looking at whether the money goes to workers or business owners. This second method—the income approach—offers a clearer picture of who really benefits from economic growth.
The money that goes to labor’s share of GDP, or workers, is represented by employee compensation, including wages, salaries, and benefits. The money left over for businesses after paying for work and materials is called gross operating surplus, or business surplus.
The share of GDP going to workers rose 12% from 1947 to 1970, then fell 14% between 1970 and 2023. The opposite happened with the business surplus, falling 18% in the early postwar decades before jumping 34% from 1970 to today.
Meanwhile, corporate profits have outpaced economic growth by 193% since 1970. Within profits, shareholder dividends as a share of GDP grew 274%.
As of 2023, labor had lost all of the economic gains made since 1947. Had workers kept their 1970 share of GDP, they would have earned $1.7 trillion more in 2023 alone. And no legislation or federal action since 1970 has reversed this half-century trend.
When more of the economy goes to businesses instead of workers, that poses serious social problems. My research focuses on three that threaten democracy.
1. Fraying Social Bonds and Livelihoods
Not just an issue of income and assets, growing class inequality represents the fraying of American society.
For instance, inequality and the resulting hardship are linked to worse health outcomes. Americans die younger than their peers in other rich countries, and U.S. life expectancy has decreased, especially among the poor.
Moreover, economic struggles contribute to mental health issues, deaths of despair, and profound problems such as addiction, including tobacco, alcohol, and opioid abuse.
Inequality can disrupt families. Kids who experience the stresses of poverty can develop neurological and emotional problems, putting them at risk for drug use as adults. On the other hand, when minimum wages increase and people begin saving wealth, divorce risk falls.
Research shows inequality has many other negative consequences, from reduced social mobility to lower social trust and even higher homicide rates.
Together, these broad social consequences are linked to misery, political discontent, and normlessness.
2. Increasing Corruption in Politics
Inequality is rising in the U.S. largely because business elites are exercising more influence over policy outcomes, research shows. My related work on privatization explains how 50 years of outsourcing public functions—through contracting, disinvestment, and job cuts—threatens democratic accountability.
Research across different countries has repeatedly found that higher income inequality increases political corruption. It does so by undermining trust in government and institutions, and enabling elites to dominate policymaking while weakening public oversight.
Yet democratic decline and inequality are not inevitable.
Since 2010, weakened campaign finance laws driven by monied interests have sharply increased corruption risks. The Supreme Court ruled then in Citizens United to lift campaign finance restrictions, enabling unlimited political spending. It reached an apex in 2024, when Elon Musk spent $200 million to elect Trump before later installing his Starlink equipment onto Federal Aviation Administration systems in a reported takeover of a $2.4 billion contract with Verizon.
Research shows that a large majority of Americans believe that the economy is rigged, suggesting everyday people sense the link between inequality and corruption.
3. Undermining Belief in the Common Good
National aspirations have emphasized the common good since America’s founding. The Declaration of Independence lists the king’s first offense as undermining the “public good” by subverting the rule of law. The Constitution’s preamble commits the government to promoting the general welfare and shared well-being.
But higher inequality historically means the common good goes overlooked, according to research. Meanwhile, work has become more precarious, less unionized, more segmented, and less geographically stable. Artificial intelligence may worsen these trends.
This tends to coincide with a drop in voting and other forms of civic engagement.
The government has fewer mechanisms for protecting community when rising inequality is paired with lower taxes for the wealthy and reduced public resources. My research finds that public sector unions especially bolster civic engagement in this environment.
Given increasing workplace and social isolation, America’s loneliness epidemic is unsurprising, especially for low earners.
All of these factors and their contribution to alienation can foster authoritarian beliefs and individualism. When people become cold and distrustful of one another, the notion of the common good collapses.
Inequality as a Policy Outcome
News coverage of the Trump bill and policy debate have largely centered on immediate gains and losses. But zoomed out, a clearer picture emerges of the long-term dismantling of foundations that once supported broad economic security. That, in turn, has enabled democratic decline.
As labor’s share of the economy declined, so too did the institutional trust and shared social values that underpin democratic life. Among the many consequences are the political discontent and disillusionment shaping our current moment.
Republicans hold both chambers of Congress through 2026, making significant policy changes unlikely in the short term. Democrats opposed the bill but are out of power. And their coalition is divided between a centrist establishment and an insurgent progressive wing with diverging priorities in addressing inequality.
Yet democratic decline and inequality are not inevitable. If restoring broad prosperity and social stability are the goals, they may require revisiting the New Deal-style policies that produced labor’s peak economic share of 59% of GDP in 1970.
Keep Reading
Show Less
5 Facts That Show the Enormity of US Inequality
Well-off Americans have quietly conspired for over 40 years to transfer the riches to themselves, leading to a state of inequality that leaves the entire bottom half of our country with only about 2.5% of total national wealth.
Jul 12, 2025
The Trump administration wants us to believe that lower-income Americans, especially Medicaid recipients, are the biggest drain on the country's wealth. That couldn't be further from the truth.
Well-positioned Americans have quietly conspired for over 40 years to transfer the riches to themselves, leading to a state of inequality that leaves the entire bottom half of our country with only about 2.5% of total national wealth.
Whatever wealth exists among America's poor should not be taken away because of some ignorant prejudice of the rich. Following are some of the insidious effects of greed and blame-passing.
1. The Richest 1% Have Transferred a Third of America's Wealth From the Bottom 90% to Themselves
A Time report, referring to a Rand study, estimated that "the cumulative tab for our four-decade-long experiment in radical inequality... crossed the $50 trillion mark by early 2020."
To put $50 trillion in perspective, total U.S. wealth at the end of 2023 was about $150 trillion.
Elon Musk is leading the prospective trillionaires with over $400 billion at the end of June, 2025.
Yet with all this wealth rising to the top, American billionaires, according to economist Gabriel Zucman, have an effective tax rate of 8%.
2. Taxes Owed on Decades of Stock Market Gains Will Be Wiped Out When the Rich Kids Inherit the Wealth
In a blatant example of a system exploited by the wealthy, the tax code includes a so-called stepped-up provision which allows the super-rich to leave much of their multi-trillion-dollar stock market fortunes to their children with all the accumulated gains magically erased, and thus, in many instances, without a single dollar in taxes coming due.
It is estimated that by the middle of this century anywhere from $84 to $124 trillion in assets will be transferred to heirs, much of which will qualify for the tax-free stepped-up provision. So much for our meritocracy.
3. The Richest 1% Have Enough Money to Buy Almost ALL the Houses in America
A Redfin report explains: "The combined value of nearly 100 million U.S. homes reached $49.7 trillion at the end of 2024, while the combined net worth of America's wealthiest 1% has grown to a record $49.2 trillion."
4. The World's Richest 1% (40% of Whom are Americans) Emit as Much Pollution as Two-Thirds of Humanity
Oxfam summarizes: "The richest 1% of the world's population produced as much carbon pollution in 2019 than the 5 billion people who made up the poorest two-thirds of humanity."
5. The Poor Are Being Systematically Diminished
After 40 years of growing inequality, the "Big Beautiful Bill" is about to make it even worse.
Almost 12 million Americans are expected to lose healthcare coverage with the trillion-dollar Medicaid cuts. Major health research cuts are planned for the National Institutes of Health and the Centers for Disease Control and Prevention.
Most damaging could be the impact on the kids. Even though nearly 1 out of 5 households with children in America experiences food insecurity, the administration is cutting the Supplemental Nutrition Assistance Program (SNAP) by a quarter-trillion dollars over the next decade. A Propublica report states: "The staff of a program that helps millions of poor families keep the electricity on, in part so that babies don't die from extreme heat or cold, have all been fired. The federal office that oversees the enforcement of child support payments has been hollowed out. Head Start preschools, which teach toddlers their ABCs and feed them healthy meals, will likely be forced to shut down en masse.."
And at a time when young students are struggling to deal with the pressures of a social networking society, the administration is cutting over a $1 billion in youth mental health funding.
The poor seem to have nowhere to turn. A Vera report explains: "Almost every state has at least one law that bans activities people experiencing homelessness engage in simply to survive. Laws that prohibit panhandling, loitering, living in vehicles, or sharing food and water in public spaces all discriminate against people experiencing homelessness, as authorities eject them from public spaces, confiscate and destroy their property, and transport them to mass shelters and jails."
The Republican Response
U.S. Vice President JD Vance shrugged off the "minutiae of the Medicaid policy." President Donald Trump agreed that Republicans were "not doing any cutting of anything meaningful."
But just in case the cuts turn out to be meaningful for Americans, Sen. Mitch McConnell (R-Ky.) assures us that they'll "get over it."
In Trump's world of wealth and status, tolerance for poor Americans has turned into an ugly sense of disdain.
Keep Reading
Show Less
10 Ways the GOP’s Big Ugly Bill Could Hurt You
Instead of inflicting policy violence on the most vulnerable, Congress should harness America’s abundant wealth to create a moral economy that works for all of us.
Jul 09, 2025
The GOP’s “One Big Beautiful Bill,” passed by the narrowest of margins in Congress and signed into law by President Donald Trump, represents the largest transfer of wealth from the poor to the rich since chattel slavery.
The slashing of vital services will cause a surge of economic insecurity and preventable deaths while massive hikes in military and deportation funding will serve to perpetuate endless wars and the senseless destruction of immigrant families and their communities.
1. Death by Denial of Healthcare
Cuts to Medicaid and the Affordable Care Act, combined with new administrative hurdles to accessing benefits, could result in an estimated 51,000 preventable deaths per year. Overall, the new law and other policy changes from the Trump administration will likely strip health insurance from about 17 million people. Research shows that the rigid, red tape-laden work requirements in the bill are unlikely to actually increase employment. Most Medicaid enrollees already work, and even those who do work can end up without healthcare if red tape trips up their ability to prove it. Those who do not work are often caring for family members or attending school or have a disability. Formerly incarcerated people also face particularly high barriers to employment.
2. Hospital Apocalypse
The budget reduces the allowable Medicaid provider taxes that many states use to fund this vital program. The threat is particularly severe for rural hospitals because they rely more heavily on Medicaid revenue than urban facilities. More than 700 rural hospitals are already at risk of closure, and at least 338 rural hospitals, including hospitals in nearly every state, are at increased risk due to changes in this budget. To buy off critics, Republicans included a rural health fund that is expected to cover less than a third of projected rural Medicaid losses.
3. Taking Food From the Mouths of Hungry People
New work requirements for Supplemental Nutrition Assistance Program (SNAP) benefits will take food assistance from millions of people, including children and veterans. As with Medicaid, new work requirements for SNAP would have little effect on employment but would cause more children to go hungry.
4. Squeezing States on SNAP
This vital food program has always been fully federally funded, but the newly passed budget will require states to take on a significant share of the costs. This unprecedented burden shift will likely lead many states to cut enrollees or even terminate food aid programs for the first time since their inception, causing even more people to go hungry.
5. Barring Lawfully Present Immigrants From Aid
Hundreds of thousands of lawfully present immigrants, including children, who’ve fled persecution and violence in their home countries in search of safety in the United States (refugees, asylum-seekers, some victims of sex or labor trafficking, some victims of domestic violence, and people with temporary protected status) will lose access to Medicaid, the Children’s Health Insurance Program, Medicare, ACA tax credits, and SNAP benefits. And 2.6 million U.S. citizen children who live with only an undocumented adult are expected to lose their Child Tax Credit.
6. Terrorizing Immigrant Families
The GOP budget provides roughly another $170 billion to arrest, detain, and deport immigrants, and for a border wall and militarization in the next few years. That includes $45 billion for building new immigration detention centers, including family detention facilities—a 265% increase on an annual basis that would primarily benefit private companies contracted to build and run detention facilities. It includes an additional $29.9 billion for deportation operations and $46.6 billion for border wall construction.
7. Takes From the Poor to Give to the Rich
New tax policies would overwhelmingly benefit the wealthiest households. Cuts to healthcare, student loans, and other vital services would wipe out the minor tax benefits for working families. A Yale analysis of the bill’s combined tax and spending policies finds that the poorest 20% of households would suffer a net income loss of $700 per year on average while the top 1% would receive a $30,000 increase.
Other tax changes benefit the wealthiest while leaving the poorest without help. Despite modest increases in the maximum Child Tax Credit, the budget will still deny benefits to an estimated 17 million children whose parents earn too little to receive the full credit. For the wealthy, changes to the estate tax mean that wealthy heirs will enjoy a one-time tax savings of $6.4 million while 99.8% of American families would not get a single penny from this tax cut.
8. Leaving Corporations to Enjoy Their Spoils
The budget keeps the corporate tax rate at 21%, a drastic reduction from the 35% pre-2018 rate—despite the fact that ordinary workers have not benefited from this rate reduction. The budget also includes more than $1 billion in new tax breaks and subsidies for the fossil fuel industry—on top of existing subsidies for the industry that accelerate climate change while costing taxpayers an estimated $17 billion per year.
9. Rewarding Polluters While Raising Energy Costs
The budget allows oil and gas companies to avoid paying fees for polluting methane leaks that are a major cause of climate change, while cuts to clean energy subsidies could mean that household energy bills could spike by $415 a year over the next decade.
10. Funding War and Enriching War Profiteers
President Trump is requesting a record-high $1.011 trillion for the Pentagon and war for FY 2026. Because regular appropriations bills require a 60-vote Senate majority, the GOP included a $150 billion boost for the Pentagon through the reconciliation bill, which requires only a straight majority. They included $25 billion to begin building the “Golden Dome,” a missile defense system that is economically and physically impossible and would only drain more money from social programs to enrich wealthy Pentagon contractors, including Elon Musk; as well as $14 billion for new artificial-intelligence-driven weapons that will further enrich tech companies while making wars more deadly.
A Moral Budget Versus Policy Violence
Instead of inflicting policy violence on the most vulnerable, Congress should harness America’s abundant wealth to create a moral economy that works for all of us. By fairly taxing the wealthy and big corporations, reducing our bloated military budget, and demilitarizing immigration policy, we could free up more than enough public funds to ensure we can all survive and thrive. As our country approaches its 250th anniversary, we have no excuse for not investing our national resources in ways that reflect our constitutional values: to establish justice, domestic tranquility, real security, and the general welfare for all.
This analysis was produced by the Institute for Policy Studies for Repairers of the Breach.
Keep Reading
Show Less
Most Popular