Increasing income inequality is costing most Americans thousands of dollars every year in their paychecks and has made the coronavirus more deadly and its economic consequences more severe than in any other advanced nation in the world.
That is the conclusion of Nick Hanauer and David M. Rolf who reported in TIME about new analysis from the RAND Corporation, which estimates that "upward redistribution" of income benefiting the top 1 percent of Americans has cost the bottom 90 percent some $50 trillion over the past four decades.
The RAND study estimates that had the more equitable income distributions of the three decades from 1945 to 1974 held steady, the bottom 90 percent would have earned $2.5 trillion more in 2018 alone -- enough to double median income and pay every working person $1,144 more a month every year.
The RAND authors, Carter C. Page and Kathryn Edwards, estimated that the cumulative cost of growing income inequality reached $47 trillion from 1975 through 2018, and Hanauer and Rolf projected that it exceeded $50 trillion early this year.
"That’s $50 trillion that would have gone into the paychecks of working Americans had inequality held constant—$50 trillion that would have built a far larger and more prosperous economy—$50 trillion that would have enabled the vast majority of Americans to enter this pandemic far more healthy, resilient, and financially secure," they wrote.
Unequal Inequality
But they also pointed out that "even inequality is meted out unequally," as low-wage earners and their families, disproportionately people of color, suffer from far higher rates of such diseases as asthma, hypertension, diabetes, and other COVID-19 comorbidities.
At the same time, they noted, they are less likely to have health insurance and more likely to work in "essential" industries with the highest levels of coronavirus exposure and transmission, and so they are more susceptible to contracting the virus.
"Imagine how much safer, healthier, and empowered all American workers might be if that $50 trillion had been paid out in wages instead of being funneled into corporate profits and the offshore accounts of the super-rich," wrote Hanauer and Rolf. "Imagine how much richer and more resilient the American people would be. Imagine how many more lives would have been saved had our people been more resilient."
They continued:
"It is impossible to deny the many ways in which our extreme inequality—an exceptionally American affliction—has made the virus more deadly and its economic consequences more dire than in any other advanced nation.
"Why is our death toll so high and our unemployment rate so staggeringly off the charts? Why was our nation so unprepared, and our economy so fragile? Why have we lacked the stamina and the will to contain the virus like most other advanced nations?
"The reason is staring us in the face: a stampede of rising inequality that has been trampling the lives and livelihoods of the vast majority of Americans, year after year after year."
The Bottom Line
What's the real impact of that $50 trillion?
According to the RAND study authors, a typical Black man earning $35,000 a year is being paid at least $26,000 a year less than if income distributions had held constant. A college-educated, prime-aged, full-time worker earning $72,000 is losing between $48,000 and $63,000 a year.
"But whatever your race, gender, educational attainment, urbanicity, or income, the data show, if you earn below the 90th percentile, the relentlessly upward redistribution of income since 1975 is coming out of your pocket," wrote Hanauer and Rolf.
So, clearly, the trickle down theory of Republicans is not working; in fact, it's an abject failure. A rising tide lifts all boats? Not so much.
And yet, what did Republicans, led by Trump, do about all of this? In 2017, they enacted a $2.1 trillion "socialism for the rich" tax cut with the majority of benefits going to the top1 percent, while further worsening income inequality for everyone else.
November 3.