Unfortunately, many of you will not be surprised by the title of this blog post. One doesn’t have to do significant research to support the notion that the wealth divide is growing in the U.S. However, I present the following in support of that claim, which I borrowed from Bill Mitchell’s blog –
“The facts are that in advanced countries, the wealth accumulation of the last three decades has not been particularly beneficial to the poorest members of society. The rich have experienced massive gains in wealth even if the poor have enjoyed modest gains. But in the US, not only has the wealth distribution moved heavily towards the top end, the bottom 50 percent now have less wealth than they had before the GFC began and have not increased their wealth since 1989 (when comparable data is available). And further, even if the bottom end of the distribution improved their absolute position, it still remains a major problem for wealth to be increasingly concentrated among the rich. It erodes the democratic process and increases social polarisation.”
As a regular reader of the KCS blog, one will know that we often reflect on both the social and economic implications of our failure to adequately prepare our citizens for retirement. We’ve discussed the negative impact created by the move from DB plans to DC plans. In an environment of deteriorating wealth, is it really surprising that median defined contribution fund balances are insignificant? Do we really believe that it is good policy to ask untrained individuals to fund, manage, and disperse assets from a DC plan?
As a nation, we cannot afford to have a significant majority of our people living paycheck to paycheck, yet that is precisely what we have today. In addition, we still have more than 94 million age-eligible people out of our workforce (LPR at 62.9%), and with technological advances likely displacing millions more during the next decade or so, where are we going to get the demand for goods and services that is necessary to fuel our economy?
We can, and must, do better!