Inequality is Killing the American Middle-Class

The biggest issue in 2022, despite the focus on crime, January 6th, and abortion, is the economy. In an October 2022 poll from the New York Times and Siena, 44% of Americans rated inflation or the economy as the most important issue facing the country, the only topics to get double digit response rates. While economic woes are a common trend around the world, the United States is unique in one key way: Our middle class is disappearing.

The number of Americans in the middle class has steadily declined. Since 1970, the vast majority of income growth has been concentrated amongst upper income households, growing 19% more than middle-class households and 24% more than lower-income households. Today, the top 20% of Americans bring in more income than the bottom 80% combined, making income inequality in the United States the worst amongst all G7 nations. As a result, wealth inequality has also steadily increased: today, 0.1% of Americans own almost as much wealth as the bottom 90%. Three people — Bill Gates, Warren Buffet, and Jeff Bezos — collectively hold more wealth than the bottom 50% of Americans, a total of 160 million people.

What has led to this staggering level of inequality, why is it a problem, and how can we solve it? It’s perhaps most important to identify why this is an issue: after all, only by addressing this as a problem can we solve it. In a country where 37.9 million of our fellow Americans live in poverty, 34 million people experience food insecurity, and 580,000 are unhoused, the hoarding of immense wealth is immoral and cruel. Through greed and accumulation, the wealthy few become complicit in the suffering of the impoverished many. Even more pernicious, economic privilege reproduces itself and seeks to stratify itself, destroying the aspiration of equal opportunity for all. It’s why Richard Reeves writes in Dream Hoarders that America lacks intergenerational mobility, with the dual crises of the inheritance of poverty and maintenance of wealth across generations. He concludes that wealth accumulation causes immobility, as rich parents seek to ensure their children stay rich through providing unearned privileges, further tilting the economic playing field against the economically disadvantaged. Perhaps this is why intergenerational mobility in the United States is lower than all of the Nordic countries and Germany, France, Japan, Canada, Australia, and New Zealand. The U.S. doesn’t just perform poorly when compared to the West. As the New York Times wrote in 2018: “The American Dream is Alive. In China.”

Inequality is destructive in the ways it undermines the American Dream and economic mobility, but it also creates substantial problems for our society. Mark Rank writes in Poorly Understood: What America Gets Wrong about Poverty that inequality leads to “lower life expectancy, worse health, reduced child well-being and academic performance, crime, and incarceration.” It undermines public trust in our social institutions to uphold the common values of egalitarianism and equality of opportunity. It erodes the fairness of political institutions and consolidates the power of the wealthy few at the expense of the many. As Branko Milanovic found, greater inequality leads societies to move away from democracy. In almost every measure, inequality is corrosive not just to the American Dream, but to the social fabric of a strong democratic society. Perhaps this is why the overwhelming majority of Americans believe there is too much economic inequality in the United States.

How did we get here? Pew offers a few explanations, including technological change, globalization, the decline of unions, and eroding value of the minimum wage. These factors have motivated growing divides in income between the haves and the have-nots, causing the broader issue of growing wealth inequality. Globally, the pandemic has only exacerbated this phenomenon by increasing corporate profits while decimating low-wage industries. What it has led to is a modern economy that works well for a wealthy and well-connected few at the expense of the many. Both Democrats and Republicans are responsible for supporting the offshoring of American jobs and opportunities abroad and the privatization of public goods and the welfare net. Now, neoliberalism has blazed a trail of destitution and angst that has spurred the rise of right-wing demagogues promising change.

This crisis requires urgency to confront and to solve. As a starting point, we can pass economic regulations that reign in the most obscene excesses of inequality. The government must ensure all Americans have quality healthcare, education, housing, and food, basic necessities that can greatly minimize the pain of unemployment. We must pass a $15 minimum wage indexed to inflation to ensure workers are compensated more to what they’re worth. Union organizing must be protected and empowered to flourish to provide workers with better benefits and higher wages. When people are hit with hard times, we must provide unemployment insurance and financial support until they can get back on their feet. Beyond student loan forgiveness, we can forgive other forms of debt weighing down people’s lives. To pay for this, we can levy greater taxes on the rich and corporations: Millionaires and billionaires ought to pay their fair share to support the society that makes their wealth possible. 

As we fight to rebuild our middle class and restore opportunities for all, we must ensure that we include all people regardless of economic, geographic, racial, gender, or educational background. We need to build an economy that can give both a high-school dropout and a worker with a PhD a stable income, a sense of community, and dignified work. We must fight credentialism and ageism with the same fervor we oppose racism and sexism as structural forces that hold people back. When we talk about building an economy that works for all, we need to recognize that every person has a role to play — and appreciate their unique, important contributions to our society’s success.

Economic polarization has become one of the greatest crises of our time. As the middle class shrinks, as economic precarity grows, and as equality of opportunity disappears, we must name and fight the evils of inequality in order to build a more just society.