a billionaire used to be a really big deal. When Forbes magazine started
its roll call of the 400 richest Americans in 1982, there were just 13
billionaires and 5 of them were oilman H. L. Hunt’s children.
Now more than
half the Forbes 400 are billionaires. The United States has 268 billionaires and
35 million people living below the official poverty line—about $13,000 for a
Boom Times for
the 400 richest Americans are worth more than $1 trillion. Just 400
people—they could all stay at New York’s Plaza Hotel at the same time—are
worth nearly one-eighth of the total gross domestic product (GDP) of the United
States, the world’s richest economy.
researchers have compared the annual sales of the world’s largest corporations
with the economies of countries. Now we’re comparing billionaires and
400’s $1 trillion is worth more than the GDP of China, a country of over one
billion people, which is ranked number seven among the world’s richest
economies. With $85 billion when Forbes compiled this year’s 400, Bill
Gates alone matches the GDP of Singapore, the world’s 38th
largest economy. Gates is a microcosm of the wealth gap. He has
more wealth than the bottom 45 percent of American households combined.
Microsoft billionaires Bill Gates, Paul Allen, and Steve Ballmer plus the five
Wal-Mart heirs have a net worth of about $233 billion. That’s more than the
GDP of wealthy Sweden, the world’s 20th largest economy. Warren Buffet, number
three on the Forbes list, has more than the GDP of oil-rich Kuwait.
It took a net
worth (assets minus debts) of at least $625 million to get on the 1999 Forbes
400—up from $500 million in 1998. If an entry-level Forbes 400 member gives
away a million dollars, that’s equivalent to the median American household—
which makes about $39,000 a year—giving about $62.
A billion dollars
may only get you tied with 25 others for 243rd place among the Forbes 400, but
it’s still a lot of money. You’ve heard the expression, "money makes
money." Park $1 billion risk-free in a bank CD earning 5 percent interest, and
it will gain $50 million in one year.
A billion dollars
equals the combined net worth of 1,000 households worth $1 million each or
20,000 typical households.
For $1 billion
you could fund a large share of the current Head Start budget or cover tuition
for more than 250,000 low-income students at a state university. With $1 billion
you could give million-dollar endowments to 1,000 nonprofit organizations
providing job training, low-cost housing or shelters for battered women.
The top 1 percent
of American households now have more than the bottom 95 percent combined. Novell
CEO Eric Schmidt told Forbes that the scale of inequality "makes me
uncomfortable." He says, "Lots of people who are smart and work hard and
play by the rules don’t have a fraction of what I have." He adds, "I
realize I don’t have my wealth because I’m so brilliant. Luck has a lot to
do with it." And Schmidt’s not even on the Forbes 400.
When Bob Thompson
sold his Michigan road building company for $422 million he made news because he
did something unusual: he shared the proceeds with his employees. He divided
$128 million among the 550 workers, creating more than 80 millionaires. He plans
to give away much of his remaining fortune.
Thompson said he
wanted to reward the employees who had worked so hard for the company. He knew
he couldn’t be successful without them. "That’s what America should be all
about," he told People magazine. "Everybody should get a piece of the
the Forbes 400 was becoming ever more fabulously wealthy, the typical American
was stagnating. At about $50,000, the net worth of the American household in the
middle is lower than it was in 1983, adjusting for inflation. Nearly one out of
five households have zero or negative net worth (greater debts than assets).
Only one out of ten households had zero or negative net worth in 1962.
income reached a new high of $38,885 in 1998. Unfortunately, it’s not much
higher than it was in 1989, adjusting for inflation, despite longer work hours
and increased productivity. Latino households had lower real 1998 median
incomes, at $28,330, than they did in 1989.
American worker now produces about 12 percent more in an hour’s work than he
or she did back in 1989, but after adjusting for inflation, the typical
worker’s wages have increased only 1.9 percent," says John Schmitt of the
Economic Policy Institute.
are still trying to catch up with the wages their counterparts made during the
Nixon administration. Men have a lower median income now than they did in 1969,
adjusting for inflation. If not for men’s and women’s increased work,
families would be far worse off. Unfortunately, women who work full time earn
only 73 cents for every dollar earned by men.
married couple families increased their average annual paid work by 223
hours—nearly 6 weeks—between 1983 and 1997, reports the Boston Globe.
Fathers increased their work by 158 hours—4 weeks—in the same period.
Americans work longer hours than anyone else in industrialized nations.
stagnated for decades, costs did not. An average worker had to work 15.3 hours
to pay for a day’s stay at a community hospital in 1960, according to Newsday.
By 1997, they had to work 80.8 hours. A year’s tuition at a private college
took 9.1 weeks of work in 1960 and 37.4 weeks in 1997.
something’s wrong when the economy’s been good for so long and it’s still
so bad for so many people. The official poverty rate has fallen in recent years
to 12.7 percent, but it’s still higher than it was in the 1970s. Even married
couple families have higher poverty rates today than they did in the 1970s,
despite women’s greatly increased hours on the job.
One out of eight
Americans live below the official poverty line—just $8,316 for one person and
$16,660 for a family of four—including one out of four Blacks and Latinos, and
one out of five children.
One out of two
poor full-time workers does not have health insurance, the Census Bureau
reports. The total number of people without health insurance went up by about a
million last year, reaching 44.3 million people—one out of six Americans. We
are the only industrialized nation that does not insure everyone.
remains at record highs. In 1977, the 2.7 million Americans in the top 1 percent
of households had as much income, after federal taxes, as the bottom 49 million,
according to the Center on Budget and Policy Priorities. In 1999, the top 2.7
million is projected to have as much as the bottom 100 million.
Between 1977 and
1999, the top fifth of households increased their annual income after federal
taxes by 43 percent while the middle fifth gained 8 percent, and the bottom
fifth lost 9 percent. The top 1 percent of households gained 115 percent.
If the middle
fifth of households were to receive the same percentage of after-tax income in
1999 that it received in 1977, it would come to $3,500 more per household.
Households in the poorest fifth would have $3,300 more—a huge difference for
households with a projected 1999 after-federal tax income of only $8,800.
don’t last forever. If we don’t narrow inequality now, when will we?
Congress can take a first step by raising the minimum wage. Congress recently
gave itself a raise of $4,600 to $141,300, an income that is twice the average
congressional salary is 13 times the minimum wage; in 1950, it was 8 times the
minimum. Let’s cap congressional salaries until they are once again eight
times the minimum wage. That would give Congress an incentive to care as much
about constituents at the bottom of the income pyramid as at the top.
Holly Sklar is co-author of Shifting Fortunes: The Perils of the Growing
American Wealth Gap, (United for a Fair Economy www.stw.org).