There are lots of different ways to slice up the economy to analyze it. But if you slice it fine enough to separate out the top 1%--and subdivisions with it, a funny thing happens: you discover that the economy since 1973 has done almost nothing for the bottom ninety-nine percent as an aggregate. (This data comes from Berkeley economist Emmanuel Saez, with a little extra parsing by me. I'm charting increases in average income for all income groups identified.)
Oh, sure, those in the top 5 or 10 percent excluding the top 1 percent have done okay... but not by historical standards. Those in 95th to 99th percentile have seen their incomes (including capital gains) rise by just over 50% since 1973, a period of 34 years (the last data is 2007). But this compares to a 100% gain from 1945 to 1973--a period of just 28 years. That's roughly half the gain in 20% more years. And those in the 90th to 95th percentile have done substantially worse--just over a 30% gain since 1973 compared to 120% from 1945 to 1973, one quarter the growth over a period 20% longer.
What's more, when you combine their incomes with everyone else below them, to get an average income for the bottom 99%, that average has only gained 10% over the past 34 years. Of course people in the 90th to the bottom of the 99th percentile don't like to think of themselves mixed in with the rabble below. But the folks in the top 1%--particularly those in the top 0.1% must surely find this amusing, since the post-1973 economy really doesn't work for anyone else but them. And the folks in the 90th through 99th percentile aren't fooling anyone else but themselves if they think otherwise. Heck, even the bottom half of the top 1% only doubled their incomes from 1973 to 2007, the bottom 90% did almost that well from 1945 to 1973. This is the picture of an economy that's stagnant for almost everyone--and has been for 34 years now,up until the biggest downturn since the Great Depression kicked into high gear one year ago:
On the flip: the 1945-1973 economy looked dramatically different.
As I explained in my previous diary dealing with the "State of the Dream 2009" report, in this diary, I want to I want focus in on the confluence of several driving dynamics behind the persistence of the deep economic divide between the races. These are:
(1) The pre-existing racial disparities in wealth and income dating back to the pre-Civil Rights Era.
(2) The sharp break between pre-1975 liberal economics and post-1975 conservative economics, after which economic advancement was sharply concentrated amongst the more affluent, and particularly the super-rich.
(3) The concentration of wealth-promoting policies on those who need it least-those who are already among the most affluent of all Americans.
This combination of factors shows that there is a very real, hard-core economic explanation for why blacks (as well as Latinos) have been mired in struggle economically, despite the fact of tremendous efforts over the last four decades. This combination of factors also ties back into conservative ideology, which is directly responsible for closing off opportunities for poor people in general, and for blacks and Latinos in particular.
I think one of the most important findings is that-the idea that the African American community never emerged out of the 2001 recession. As the country was talking about things were going well in 2005, 2006, we saw that African Americans were actually having a decline in the employment rate, a decline in per capita income.
Prompted by Juan Gonzales on the issue of the wealth gap, Muhammad continued:
The overwhelming majority of African Americans and Latinos do not even have a savings enough that would keep them going for three months. And as you see growing unemployment and, what's not talked enough about, underemployment, there is not that safety cushion to help you get through hard times. African Americans only have about 15 percent of the wealth of white Americans. And so, again, African American community, Latino communities, and also just working-class communities as a whole, are in a much more dire situation than I think is truly recognized. And we need some political courage to deal with these issues adequately.
In covering this report, I want to do two things. First, present an overview of the scope of the main findings of the report. That's what I'm going to so in this diary. Second, in a follow-up diary, I want focus in on the confluence of several driving dynamics: (1) The pre-existing racial disparities in wealth and income dating back to the pre-Civil Rights Era. (2) The sharp break between pre-1975 liberal economics and post-1975 conservative economics, after which economic advancement was sharply concentrated amongst the more affluent, and particularly the super-rich. (3) The concentration of wealth-promoting policies on those who need it least-those who are already among the most affluent of all Americans. What this combination of factors shows is that there is a very real, hard-core economic explanation for why blacks (as well as Latinos) have been mired in struggle economically, despite the fact of tremendous efforts over the last four decades. Those explanations also tie back into conservative ideology, which is directly responsible for closing off opportunities for a poor people in general, and blacks and Latinos in particular.
