Show Me the Money! ...Where’s All the Money?

Wealth distribution in America has been a contentious issue for decades, with critics arguing that it perpetuates inequality and limits social mobility. Despite being the wealthiest nation in the world, the United States also has one of the highest levels of wealth inequality among developed countries. According to a study by the Federal Reserve, the top 1% of households in America own 15 times more wealth than the bottom 50% (Dettling, Hsu, & Jacobs, 2020). This concentration of wealth has significant implications for economic growth, social mobility, and political stability.

Click on the photo for a demonstration from CBS Mornings of how misunderstood wealth distribution is in America.

One of the main factors contributing to wealth inequality in America is the concentration of wealth among a small group of individuals and families. The top 0.1% of households in America hold about the same amount of wealth as the bottom 90% (Saez & Zucman, 2019). This concentration of wealth is perpetuated by factors such as inheritance, executive compensation, and favorable tax policies for the wealthy.

Inheritance is a significant driver of wealth inequality in America. Inheritances are often passed down from generation to generation, creating a cycle of wealth that perpetuates inequality. According to a report by the Institute for Policy Studies, the wealthiest 1% of Americans receive about 40% of all inheritance wealth, while the bottom 90% receive just 10% (Collins & Hoxie, 2018). This concentration of inheritance wealth exacerbates existing wealth disparities and limits social mobility.

Executive compensation is another factor contributing to wealth inequality. CEO pay has increased dramatically in recent decades, with CEOs of the largest companies in America earning an average of 320 times more than the average worker (Mishel & Davis, 2014). This trend has been fueled by various factors, including changes in corporate governance, the rise of shareholder activism, and the increasing importance of executive talent in a globalized economy.

Another factor contributing to wealth inequality in America is the racial wealth gap. Black and Hispanic households in America have significantly less wealth than white households, even when controlling for income (Taylor, Kochhar, Fry, Velasco, & Motel, 2011). This is primarily due to historical discrimination, disparities in education and employment opportunities, and systemic racism in the criminal justice system.

The consequences of wealth inequality are profound. Studies have shown that countries with high levels of wealth inequality also have lower levels of social mobility (Corak, 2013). This means that individuals born into low-income families are less likely to move up the economic ladder than those born into wealth. The most dangerous symptom of wealth inequality is political instability, as the concentration of wealth and power in the hands of a few can undermine democracy and social cohesion.

This is a photo of the January 6th insurrection, a clear example of an attempt to undermine our democracy on a large scale and representative of the social division in our country.

Efforts to address wealth inequality in America have been met with mixed success. Policies such as progressive taxation, minimum wage increases, and social safety net programs have helped to reduce poverty and provide a basic standard of living for many Americans. However, these policies have also faced significant opposition from those who argue that they discourage entrepreneurship and job creation.

In conclusion, wealth distribution in America is highly unequal, with a small group of individuals and families holding the majority of the nation's wealth. It is a bipartisan issue with support nationwide. This concentration of wealth has significant implications for social mobility, economic growth, and political stability. Addressing wealth inequality will require a multifaceted approach that includes policies to address the concentration of wealth, the racial wealth gap, and the underlying factors that perpetuate inequality.

Click HERE for a video about what’s being done and what we can do.

Message from the Editor

As we look at the primary consequences of prolonged, severe unequal wealth distribution, it’s important to look at our society today. We’re politically divided, emotionally and mentally exhausted, financially strained, and as we try to solve all of the world’s issues, maybe this is where we should start. After all, it’s hard to fight for climate change solutions, racial equity, women’s rights, LGBT+ inclusion, accessibility for all bodies, or whatever gets thrown our way when we have to fight to keep a roof over our head. I speak to so many people who don’t vote or who vote uninformed. You may think it doesn’t affect you, but look around! It affects all of us and we should all care. We need a wealth tax. We need an overhaul in our government spending. We need to make sure all of our people have shelter, water, food, and medical care. Then we can fight the rest of our problems together. I’m committed to informing and trying to touch the minds of all those I can with relatable, accurate, easy-to-consume information. Please send us a message with any comments, questions, or concerns about any information you get on this website or any affiliated material.

References:

Collins, C., & Hoxie, J. (2018). Billionaire Bonanza 2018: Inherited Wealth Dynasties in the 21st Century. Institute for Policy Studies.

Corak, M. (2013). Income inequality, equality of opportunity, and intergenerational mobility. Journal of Economic Perspectives, 27(3), 79-102.

Dettling, L. J., Hsu, J. W., & Jacobs, L. E. (2020). Recent trends in wealth-holding by race and ethnicity: Evidence from the Survey of Consumer Finances. Federal Reserve Bulletin, 106(3).

Mishel, L., & Davis, A. (2014). CEO pay continues to rise as typical workers are paid less. Economic Policy Institute, 3(7), 1-14.

Saez, E., & Zucman, G. (2019). The triumph of injustice: How the rich dodge taxes and how to make them pay. WW Norton & Company.

Taylor, P., Kochhar, R., Fry, R., Velasco, G., & Motel, S. (2011). Wealth gaps rise to record highs between whites, blacks, and Hispanics. Pew Research Center, 26, 2011.