By Jeff Gates
Shared Capitalism Institute
May 1999
The United Nations Development Program (UNDP) reported in 1998 that the
world's 225 richest people now have a combined wealth of $1 trillion.
That's equal to the combined annual income of the world's 2.5 billion
poorests people.
The wealth of the three most well-to-do individuals now exceeds the
combined GDP of the 48 least developed countries.
While global GNP grew 40 percent between 1970 and 1985 (suggesting
widening prosperity), the number of poor grew by 17 percent.
Although 200 million people saw their incomes fall between 1965 and 1980,
more than 1 billion people experienced a drop from 1980 to 1993.
In sub-Saharan Africa, twenty nations remain below their per capita
incomes of two decades ago while among Latin American and Caribbean
countries, eighteen are below their per capita incomes of ten years ago.
UNDP reported in 1996 that 100 countries were worse off than 15 years ago.
Three decades ago, the people in well-to-do countries were 30 times
better off than those in countries where the poorest 20 percent of the
world's people live. By 1998, this gap had widened to 82 times (up from 61
times since 1996).
In 1998, that 20 percent of the world's people living in the
highest-income countries accounted for 86 percent of total private
consumption expenditures while the poorest 20 percent accounted for only
1.3 percent. That's down from 2.3 percent three decades ago.
At present, 3 billion people live on less than $2 per day while 1.3
billion get by on less than $1 per day. Seventy percent of those living on
less than $1 per day are women. With global population expanding 80
million per year, World Bank President James D. Wolfensohn cautions that,
unless we address "the challenge of inclusion," 30 years hence we will have
5 billion people living on less than $2 per day.
Two billion people worldwide now suffer from anemia, including 55 million
in industrial countries. Given current trends in population growth and
prosperity-hoarding, three decades from now we could have a world in which
3.7 billion people are anemic.
These related phenomena led UN development experts to observe that the
world is heading toward "grotesque inequalities," concluding: "Development
that perpetuates today's inequalities is neither sustainable nor worth
sustaining."
UNDP calculates that an annual 4 percent levy on the world's 225 most
well-to-do people (average 1998 wealth: $4.5 billion) would suffice to
provide the following essentials for all those in developing countries:
adequate food, safe water and sanitation, basic education, basic health
care and reproductive health care. At present, 160 of those individuals
live in OECD countries; 60 reside in the United States.
As of 1995 (the latest figures available), Federal Reserve research found
that the wealth of the top one percent of Americans is greater than that of
the bottom 95 percent. Three years earlier, the Fed's Survey of Consumer
Finance found that the top one percent had wealth greater than the bottom
90 percent.
From 1983-1995 only the top five percent of households saw an increase in
their net worth while only the top 20 percent experienced an increase in
their income.
Wealth projections through 1997 suggest that 86 percent of stock market
gains between 1989 and 1997 went to the top ten percent of households while
42 percent went to the most well-to-do one percent.
Stock market participation is broad but remarkably shallow. Though more
American adults own stocks and stock mutual funds than at any time in
history, 71 percent of households own no shares at all or hold less than
$2,000, including mutual funds and popular 401(k) plans.
Adjusting for inflation, the net worth of the median American household
fell 10 percent between 1989 and 1997, declining from $54,600 to $49,900.
The net worth of the top one percent is now 2.4 times the combined wealth
of the poorest 80 percent.
The modest net worth of white families is 8 times that of
African-Americans and 12 times that of Hispanics. The median financial
wealth of African-Americans (net worth less home equity) is $200 (one
percent of the $18,000 for whites) while that of Hispanics is zero.
Between 1983 and 1995, the bottom 40 percent of households lost 80
percent of their net worth. The middle fifth lost 11 percent. By 1995,
18.5 percent of households had zero or negative net worth (an average
-$5,600, down from -$3,000 in 1983).
By 1995, the middle quintile of income-earners had only enough savings to
maintain their current standard of living for 1.2 months (i.e., if they
lost their jobs). That's down from 3.6 months in 1989.
Household debt as a percentage of personal income rose from 58 percent in
1973 to an estimated 85 percent in 1997.
In 1997, 1.4 million Americans filed for personal bankruptcy. That works
out to roughly 7,000 bankruptcies per hour, 8 hours a day, 5 days a week.
Though average household income rose 10 percent between 1979 and 1994, 97
percent of that gain was claimed by the most well-to-do 20 percent.
In 1998, weekly wages were 12 percent lower than in 1973 on an
inflation-adjusted basis. Productivity rose 33 percent over that perioo.
Had pay kept pace with productivity, the average hourly wage would now be
$18.10, rather than $12.77. That translates into a difference in annual
pay of $11,000 for a full-time, year-round worker.
Between 1970 and 1990, the typical American worked an additional 163
hours per year. That's equivalent to adding an additional month of work
per year - for the same or less pay.
In 1996, the Census Bureau reported record-level inequality, with the top
fifth of U.S. households claiming 48.2 percent of national income while the
bottom fifth gets by on 3.6 percent.
In 1973, the income of the top 20 percent of American families was 7.5
times that of the bottom 20 percent. By 1996, it was 13 times.
Business Week reports that in 1999 top executives earned 419 times the
average wage of a blue-collar worker, up from 326:1 in 1998. In 1980, the
ratio was 42:1.
In 1982, inclusion on the Forbes 400 list of richest Americans required
personal wealth of $91million. The list then included 13 billionaires. By
1998, $500 million was required and the list included 189 billionaires.
Note, however, that Forbes 1998 figures were based on a September 1, 1998
Dow-Jones Industrial Average of 7827. The Dow topped 10,000 in early
1999.
The combined net worth of the Forbes 400 was $738 billion on September 1,
1998. That's up from $624 billion in 1997. That's an average one-year
increase of $285 million per person. That works out to $780,000 per day or
$32,500 per hour ($541 per second).
Microsoft CEO Bill Gates has more wealth than the bottom 45 percent of
American households combined.
Spending on luxury goods grew by 21 percent from 1995 to 1996 while
overall merchandise sales grew only 5 percent.
More Information on Inequality of Wealth and Income Distribution
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