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Archive for Monday, October 18, 1999

WEALTH GAP CONTINUES TO GROW

October 18, 1999

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— Here's a remarkable fact: The average U.S. top executive makes 419 times what he pays his average worker. Disproportionalism on such a scale is what historical movements are made of. But no such movement stirs the America of 1999 -- perhaps because the good economic news is so abundant.

The Census Bureau reported recently that rising incomes have lifted 1.1 million Americans out of poverty in the last year. The percentage of people below the official poverty line fell to its lowest level since 1989. Yet the galling lopsidedness of the resources remains: Economic inequity is resistant to the happy effects. The income gap between rich and poor is bigger than at any point in 20 years. And the gap between the pay of the average worker and the pay of big executives has grown astonishingly wide.

A study earlier this fall by the Center on Budget and Policy Priorities examined data from the Congressional Budget Office on income disparities. It found that the richest 2.7 million Americans will get as much after-tax income this year as the lowest-income 100 million. Even more imbalanced than disparities in income are disparities in wealth. While the top 1 percent of households receive 13 percent of the after-tax income, they hold almost 40 percent of the nation's wealth.

The closer you look at the difference between the lives of the haves and the have-nots -- or between the have-a-lots and the have-a-littles -- the more out of whack it appears. A pro-labor think tank took a look at the pay gap between top executives and the average worker recently, and found that the ratio of the pay of top executives to that of workers has zoomed from 42 to 1 in 1980 to that eye-catching 419 to 1 last year.

As the Institute for Policy Studies noted, if worker pay had risen at the same pace as executive pay, workers today would average more than $110,000 year -- instead of the $29,000 they do average. The minimum wage, if workers had kept pace with big shots, would be $22.08 an hour -- instead of $5.15.

Much as we like to focus on what has trickled down, what has pooled at the top is far more impressive. The Wall Street Journal reported last summer that the number of Americans with adjusted gross incomes of $1 million or more in 1997 was 142,556 -- nearly double the total for 1995.

When the average chief executive of a large company is making $10.6 million -- last year's figure -- and his pay is going up 36 percent -- as it did in 1998 alone -- talk of the value of hard work is empty talk. At least it must seem so to the average blue-collar employee, whose pay rose 2.7 percent last year.

In good times, people put up with a lot. But it's hard to imagine such imbalance can go on forever; the resentment-breeding potential is too great.

Meanwhile, it breeds worse than resentment for a remarkable proportion of America's kids to whom poverty brings unhappiness, hunger and hopelessness. Perhaps this is where the income inequity will most forcefully connect with the political campaign now before us.

We've heard a little bit about poor kids from our politicians -- specifically on providing them health insurance. But we haven't heard nearly as much as the challenge demands. Nearly one in four of America's kids below 6 is growing up in poverty. Between ages 6 and 18, the number is one in five. Add to that the number of kids growing up in "near poverty," and almost half of America's kids are in the pool -- more than in any other Western nation.

This is the inexcusable truth, prevailing even in our boom times, to which a new book seeks to draw our attention. "Lives on the Line: American Families and the Struggle to Make Ends Meet," by Martha Shirk, Neil Bennett and J. Lawrence Aber, profiles 10 poor families with children and seeks to challenge our assumptions about what makes -- and what keeps -- them poor.

It's a compelling experience, reading these stories of struggle and defeat, and juxtaposing them with the lives of America's mega-rich -- so many galaxies away, in the very same country.

Could it be that we hear so little of these needs in the campaign because this campaign itself is inordinately shaped by money, the higher the sum, the better -- just like America?

-- Geneva Overholser is a columnist for Washington Post Writers Group. Her e-mail address is overholserg@washpost.com.

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