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January 28, 2015
May 1, 2010
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Big-Time Costs of Inequality on Families
Paying more than you
BY S AM P IZZIGATI
Have you ever won-
dered what inequality
costs the average Ameri-
That is, what price do
we pay — in actual dol-
lars and cents — for tol-
erating an economy fix-
ated on pumping our treasure to the top?
That question has no simple answer.
How much, for instance, should we
value an added year of life? We know —
from hundreds of research studies over
the years — that people live longer,
healthier lives in more equal nations.
We also know that more equal societ-
ies have lower levels of mental illness,
higher levels of trust, and fewer teenage
pregnancies and homicides. Placing dol-
lar signs on quality-of-life indicators like
these can get complicated.
On the other hand, dollar signs do
come easy when we’re talking about
income and wealth.
The Economic Policy Institute has gone
through one exercise along this line. How
much income would middle-class Ameri-
cans be making today, the institute’s re-
searchers asked, if the United States had
the same distribution of income now as
our nation had back at the end of the
The difference between now and then
could hardly be starker. Since 1979,
households in America’s top 1 per-
cent have more than doubled their
share of the nation’s income, from 8 to
nearly 20 percent.
What if this increase in inequality
had never happened? What if middle-
class households were taking in the
same share of the nation’s income
they took in four decades ago?
The institute focused its calculations
on 2007, the last year before the Great
Recession. In that year, the average
middle-class income in the U.S. — that
is, the average for the middle 60 percent
of American households — amounted to
If America had been as equal in 2007
as it was in 1979, that average income
would have been $94,310. In other words,
inequality is costing the average Ameri-
can family about $18,000 a year.
But the global economy, some might
argue, has changed fundamentally over
the past four decades. Simple compari-
sons of then vs. now, they say, no longer
tell us much.
For argument’s sake, let’s accept this
rather dubious claim — and make a dif-
ferent comparison. Let’s contrast the
wealth of ordinary Americans today with
the wealth of ordinary people in a more
France makes for a good comparison.
France and the U.S., the Swiss bank
Credit Suisse reported last fall, have about
the same total wealth per adult.
If you divide the wealth of the U.S. by
our adult population, that is, you end up
with $347,845 per adult. If you do the
same for France, you end up with
$317,292 per adult.
Total equality, of course, reigns in nei-
ther France nor the U.S. But if both
nations divvied up their wealth on a to-
tally equal basis, the average American
would have slightly more wealth than the
average person in France.
What do we actually see?
In France today, “median” adults —
those with more wealth than the poorest
half of France’s adult population but less
wealth than the richest half — have
$140,638 in net worth to their name. In
the United States, by contrast, median
adult wealth stands at a mere $53,352.
The bottom line? If the United States
had as equal a distribution of wealth as
France, typical American adults today
would have almost triple their current net
So how much does inequality cost
America’s middle class? More than we
realize. Much more.
OtherWords columnist Sam Pizzigati
is an Institute for Policy Studies asso-