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article image90 percent of Americans poorer now than in 1987

By Stephen Morgan     Nov 2, 2014 in Lifestyle
It may come as no surprise to many ordinary Americans that they are far worse off now than in the past. Just how so, has recently become evident from a new report, as well as recent comments from Janet Yellen, the Federal Reserve Board Chairwoman.
According to a new study by Emmanuel Saez and Gabriel Zucman for the National Bureau of Economic Research (NBER), 90% of households in the US are poorer now than they were in 1987. In other words, the economic boom which lasted from the late 1980's to 2007 not only passed people by, but left them worse of than before.
Analysing the findings, the Washington Post pointed out that “It's been a lost 25 years for the bottom 90 percent.” At the same time, it notes that the study revealed that inequality has rocketed leaving 41 percent of all wealth in the US in the hands of the top 1%.
According to the Post, the study shows that the polarization is getting even sharper. “Since 1980,” it says “the top 0.01 percent's piece of the wealth pie has increased by 8.6 percentage points, while the next 0.09 percent's has done so by 5.4. The bottom 99 percent, meanwhile, have seen their wealth share fall an astonishing 18 percentage points.”
Earlier this month, the New York Times also reported on a speech by Janet Yellen at the Federal Reserve Bank of Boston Economic Conference on Inequality of Economic of Opportunity, where she said that “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”
Illustrating these increasing inequalities of opportunity, she pointed to a quadrupling in student loan debts which have spiralled from $260 billion in 2004 to $1.1 trillion in 2014, something which has hit average families hard.
In her speech, transcribed on the Federal Reserve website, she makes the point that, “The past several decades have seen the most sustained rise in inequality since the 19th century.” The recent period, she noted, showed that, “the wealthiest 5 percent of American households held 54 percent of all wealth reported in the 1989 survey. Their share rose to 61 percent in 2010 and reached 63 percent in 2013.” At the same time, the lower 50% percent of households held just 3 percent of wealth in 1989 and that has fallen to 1 percent in 2013.
As the Washington Post points out, much of this can be attributed to the housing crash of 2007-2008, which wiped out equity but not debts. The rich gained from the bull market in stocks after 2008, while others got nothing. Indeed, during the present recovery, living standards have got worse for the rest of the population.
The US is now the seventh most unequal society in the world just ahead of Thailand, with 74 percent of wealth being owned by the top 10 percent. Among developed countries, the gap between rich and poor in America is second only to Chile.
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