Inequality in the United States—pandemic edition

from David Ruccio

Year 3 of the Trump presidency was absolutely terrific—indeed, record-breaking—for Americans.

At least that’s how things look in terms of the headline numbers from the Census Bureau: median household income was up (by 6.8 percent, a record) over 2018 and the official poverty rate decreased (by 1.3 percentage points, to 10.5 percent, the lowest rate observed since estimates were initially published for 1959).*

And then there’s Kevin Hassett, former chair of Trump’s White House Council of Economic Advisers (who returned to the White House to lead its pandemic-response team, downplaying the danger of coronavirus and pushing the administration to re-open the economy amid lockdowns and social distancing) who seized on the report to make another of his wild claims:

If you’re a social justice warrior and you’re looking at the data, you would have to say that the Trump years, through the beginning of the pandemic, were the sort-of best years for advances in social justice since World War II.

The problem is that other data in the same report show nothing of the sort.

The distribution of income in the United States was just as grotesquely unequal in 2019 as it was in 2018 (and in every year both before and now during the Trump presidency). The highest quintile of American households captured 51.9 percent of income in the United States (it was 52 percent in 2018), the fourth quintile 22.7 percent (compared to 22.6 percent the previous year), and so on down the line. The lowest quintile got 3.1 percent, exactly the same as in 2018.

So no, no “social justice warrior” would be able to say the Trump years were the “best years for advances in social justice since World War II.”

In fact, quite the opposite. The economic policies of the Trump administration are both the product of and serving to reinforce the fundamental inequalities that have characterized the United States for decades now.

They’re also the reason why the novel coronavirus pandemic has hit the United States so savagely and unevenly. As I argued back in May, and Nick Hanauer and David M. Rolf recently concurred in Time,

Like many of the virus’s hardest hit victims, the United States went into the COVID-19 pandemic wracked by preexisting conditions. A fraying public health infrastructure, inadequate medical supplies, an employer-based health insurance system perversely unsuited to the moment—these and other afflictions are surely contributing to the death toll. But in addressing the causes and consequences of this pandemic—and its cruelly uneven impact—the elephant in the room is extreme income inequality.

The basis of their claim about inequality in the United States is a new working paper by Carter C. Price and Kathryn Edwards [ht: mfa] of the RAND Corporation, “Trends in Income From 1975 to 2018.”

While their general claim is pretty familiar (the pattern of capitalist growth in the United States during the two or three decades after World War II lowered the degree of inequality but, beginning in the mid-1970s, the trend was reversed and inequality rose during every decade), their analysis of the new pattern of capitalist growth reveals just how obscene it has been.

Consider the following conclusions from their study:

  • On average, extreme inequality is costing the median income full-time worker about $42,000 a year. Half of all full-time workers now earn less than half what they would have had incomes across the distribution continued to keep pace with economic growth.
  • The median male worker needed 30 weeks of income in 1985 to pay for housing, healthcare, transportation, and education for his family. By 2018, that “Cost of Thriving Index” had increased to 53 weeks (more weeks than in an actual year).
  • Two-income families are now working twice the hours to maintain a shrinking share of the pie, while struggling to pay housing, healthcare, education, childcare, and transportation costs that have grown at two to three times the rate of inflation.

Basically, according to Price and Edwards’s calculations, the income growth for most groups of Americans—thus, the bottom 25 percent, the median, the bottom 90 percent, and so on—was less than the rate of growth of real per capita Gross Domestic Product. Only the incomes of those in the top 5 percent grew at a faster rate. Thus, for example, the aggregate income for the population below the 90th percentile after 1975 would have been 67 percent higher in 2018 had income growth followed the pattern of the first two post-War decades.

The cumulative result over the past 45 years is that the members of the bottom 90 percent lost almost $50 trillion ($47 trillion or $48.6, depending on the price deflator used), which was seized by those at the top, especially the richest 1 percent of Americans.**

That pattern of unequal growth, which was inherited by the Trump administration, has simply not changed in the last three and a half years, no matter what Trump, Haslett, or the other “hacks and grifters” in the White House say.

Moreover, the monstrous inequalities that existed at the end of 2019 have shaped in profound ways both the effects of the spread of the coronavirus across the country and the early stages of the recovery from the Pandemic Depression. American economic economic and political elites have demanded and been able to implement policies that have only served to reinforce the unequalizing pattern of economic growth, which left most Americans vulnerable to the pandemic and to the resulting economic downturn.

The unequal pattern of capitalist growth in the United States documented in the new RAND report is exactly the opposite of what social justice warriors have been fighting for. Everyone, except the tiny group at the top, have been the ultimate losers.

———

*But there is a caveat on the median household income figures: the bureau’s main household survey for the report on Income and Poverty in the United States: 2019 was conducted in March and April of this year, as the pandemic was surging. That lowered the response rate, especially among low-income Americans. Still, the bureau estimates that median income in 2019 was about 4.1 percent higher than in 2018.

**The missing piece in the story told by Price and Edwards has to do with the mechanism of the massive transfer from the bottom 90 percent to those at the top. I have tried to fill in that missing piece, most recently in 2019 (e.g., here and here).