”People At The Far Ends Of The Economic Ladder”: Why Are Poor Americans Dying So Much Earlier Than Rich Americans?
For a poor woman born in the Roaring Twenties, getting to age 50 was something of an accomplishment. She had to contend with diphtheria and tuberculosis, hookworm and polio, not to mention childbirth, which killed about 800 women for every 100,000 births at the beginning of the decade. Widespread use of penicillin to treat infections was still 20 years away; Medicaid, four decades. If she did make it to 50, on average she would live to be 80 years old. That sounds pretty good, until you consider that the richest women born at the same time lived about four years longer.
Americans have become much healthier since then, generally speaking, thanks to scientific advances, higher living standards, better education, and social programs. Life expectancy hit a record high in 2012. But as with economic prosperity, gains in physical health haven’t been spread equally. Instead, they’ve been increasingly skewed towards the wealthy—and a new analysis from the Brookings Institution indicates gaps in lifespan between the rich and the poor are getting worse, not better.
Using data from the Social Security Administration and other government records, the report compares the lifespan of people born in 1920 and in 1940 who were in either the top or bottom ten percent of wage earners. It turns out that rich men born in 1940 can expect to live 12 years longer than the poorest, compared to a six-year gap between rich and poor men born in 1920. The disparity in life expectancy between women at the top and bottom more than doubled, growing from four to ten years. In fact, women at the bottom saw no increase at all in their life expectancy. The difference continued to grow between rich and poor people born in 1950.
The Brookings analysis “adds to a growing body of evidence that there is a widening gap in health between the haves and have-nots in the country,” said Steven Woolf, director of the Center on Society and Health at Virginia Commonwealth University. It’s been clear for some time that how long Americans live depends on how much money they have, even their zip codes. What the Brookings study adds is evidence of the problem getting steadily worse.
As for how socioeconomic inequalities translate into inequities in life span, “It’s rather mysterious,” said Lisa Berkman, the director of the Center for Population and Development Studies at Harvard University. One answer is that low-income people tend to be sicker in the first place, because the neighborhoods they can afford to live in are more polluted; because they can’t afford to adopt and maintain healthy behaviors; because they can’t afford health insurance premiums, copayments, and prescription drugs.
Woolf accounts much of the disparity in death rates to what he calls “stress-related conditions.” People who aren’t secure economically are likely to experience high levels of stress, which studies have linked to shorter lifespans and a heightened risk of death from strokes, heart attacks, and other illnesses. “We’re seeing a dramatic increase in deaths from opioids, whether we’re talking about prescription painkiller or heroin, but also from suicides, liver disease, and other conditions that I personally feel come from different ways that people are coping, in an unhealthy way, with the stresses that they’re facing in their daily lives,” Woolf said, particularly since the recession. Smoking, the leading cause of preventable death, takes a particularly costly toll on low-income people.
Berkman traces at least some of the stress load on lower-income Americans to changes in the workplace. The 1920s cohort analyzed by the Brookings researchers had their greatest earnings in the 40s and 50s, a time of economic growth and greater equality across the income spectrum. While low-income people born in the 1940s entered a labor market that was less demanding physically, they may also have experienced greater insecurity as wages stagnated, and difficulty balancing work and family life as more women entered the workforce. Unlike many other peer countries with more robust family support, the United States didn’t do much to accommodate the increased challenges facing working parents, Berkman noted. “The second wave of occupational risk are sets of working conditions that are hugely stressful,” she said. “They aren’t so physically stressful, but they’re socially stressful. They’re insecure, they’re inflexible, or they have no ability to balance work and family issues. We need to rethink what occupational health and safety is.”
The point of the Brookings study was to examine how the redistributive impact of Social Security benefits were impacted by lifespan gaps. The report’s authors concluded the disparity
means that high-wage workers will collect pensions for progressively longer periods, even as low-wage workers see little improvement in life expectancy. That gap, when taken together with the rise in average retirement ages since the early 1990s, means the gap between lifetime benefits received by poor and less educated workers and the benefits received by high-income and well educated workers is widening in favor of the higher income workers.
In other words, one of the programs that’s specifically intended to help poor Americans through retirement isn’t really working to their benefit anymore. To Berkman, that suggests the need for reform tailored to different groups—people who’ve worked physically demanding jobs, for instance, need a different sort of retirement security than wealthier people who are in good health able to work longer.
“It’s sort of amazing that people haven’t stood up and said, ‘Oh my god, what are we doing?” Berkman said. “What are we doing to not a small part of our country, but the bottom third, maybe even the bottom half?”
By: Zoe Carpenter, The Nation, February 18, 2016
“A Tax System Tilted Toward The Rich”: Hitting Working Americans With Punishing Rates
Congress managed to pass a tax bill in December — a great relief to tax professionals like myself who are going to spend the next four months preparing returns for clients. But what our legislators didn’t do was address the fundamentally unfair way the United States taxes people who work for a living compared with people who live off of the earnings of their investments.
Our current system hits working Americans with punishing rates compared with what the investing classes are charged. A generation’s worth of legislative twists have left our tax code so warped that during the coming filing season, one married couple bringing in $150,000 in total income from two jobs could find itself paying almost three times as much in federal income taxes as another couple that is alike in every way — except for the source of its income.
The tax code started to tilt in the direction of favoring income from investments — or favoring the 1 percent, if you will — more than 20 years ago. In 1993, the year Bill Clinton took office, a married couple claiming the standard deduction — with no children, tax credits or other adjustments to income — and earning $75,000 apiece in wages, would have paid $35,650 in federal income taxes.
A similar couple, whose income came solely from long-term capital gains, would have gotten a small break thanks to what was then the 28 percent top rate on those gains. Their total tax bill, $34,158, would have been about $1,500 lower than that of the wage earners.
By 2000 — the year George W. Bush was first elected — the tax gap between wage earners and investors had already opened up. In that year, our two-wages couple would have paid $33,607 in taxes. They also would have paid that amount if all of their income had been from stock dividends; there was no preferential treatment for dividends at that point.
But the couple whose income came from long-term capital gains would have paid $23,025 in taxes — almost a third less.
Fast-forward to the 2014 tax season. Our two-income couple are still working full time to make the same $150,000 (not a farfetched scenario in our new-normal era of stagnant wages). After a decade’s worth of inflation adjustments to their tax bracket, their tax bill is now $24,138.
And the couple living off of their investments? Their tax bill — whether their money came from long-term capital gains or qualifying dividends — has been slashed to $8,385, or a little more than one-third of the tax load on wage earners.
Some of my clients who get their money from unearned income find this discrepancy unbelievable when they compare their federal taxes to their state bills. During this tax season, I know I will have clients — in California and Oregon, where I live — who will pay more in state income taxes than they do in federal taxes. I may even have some clients who will be stunned to learn that they face a four-figure state tax bill while paying exactly zero in federal income taxes for the year.
The reason: The federal code provides that there is no tax on capital gains or qualifying dividends for people in the 15 percent income tax bracket. That means that a Los Angeles married couple filing jointly for 2014 with $94,100 of adjusted gross income, all from long-term capital gains and qualifying dividends, would pay nothing — zero! — in federal income tax. But their California tax bill would be north of $3,000.
How did we get to this point? No legislator ever campaigned saying, “Tax laborers more than investors!” But several changes in the code since the early 1990s, including lowered tax rates on capital gains and lowered rates on qualified dividends, have conspired to produce that result. My high-income clients were dismayed last year by the new 3.8 percent net investment income tax, which applies to joint filers with modified adjusted gross incomes of more than $250,000 ($200,000 for singles), but that affects relatively few filers and, perversely enough, applies to non-tax-advantaged income such as rentals, as well as to dividends and long-term gains.
Neither political party gets sole credit or blame. President George W. Bush was most aggressive about pushing such tax changes, but breaks for unearned income were also passed and extended under both the Clinton and Obama administrations. Supporters argued that lower rates would benefit retirees living on fixed incomes and also spur investments. But the Center on Budget and Policy Priorities says that almost half of all long-term capital gains in 2012 went to the top 0.1 percent of households by income. For the nearly 60 percent of elderly filers who had incomes of less than $40,000 in 2011, the lower rates were worth less than $6 per household.
In 1924 — a different era to be sure — industrialist-robber baron-Treasury Secretary Andrew Mellon wrote in support of treating wages more favorably than investments. “The fairness of taxing more lightly income from wages, salaries or from investments is beyond question,” he wrote. “In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs. Surely we can afford to make a distinction between the people whose only capital is their mental and physical energy and the people whose income is derived from investments.”
Well, that’s certainly not going to happen any time soon. But leveling out the tax treatment of wages and investment incomes would increase both the perceived and actual fairness of the tax code. It would eliminate preferences that distort investment and financial planning decisions. A fairer code might also increase respect for the system and improve tax collection rates overall.
By: Joseph Anthony, The Los Angeles Times (TNS); The National Memo, December 31, 2014
“The Haves And The Have-It-Alls”: The Pain Of Inequality Among Yacht Buyers
In this season of mass commercialism, let’s pause to consider the plight of simple millionaires.
Why? Because we now share a common cause: Inequality. You don’t hear much about it, but millionaires are suffering a wealth gap, too, and it’s having a depressing impact on both their level of consumption and their psychological well-being. While it’s true that millionaires certainly are still quite rich — indeed, they’re counted as full members of the 1 percent club. But that generalization overlooks the painful and personally grating fact that mere millionaires today are ranked as “lesser 1 percenters.” They don’t dwell in the same zip codes as the uber-rich few, who comprise the uppermost 100th of the 1 percenters, with wealth starting in the hundreds of millions of dollars and spiraling up into multiple billions.
No doubt you’ll be saddened to learn that this divide between The Haves and The Have-it-Alls is widening. Astonishingly, plain old millionaires are being abandoned by retailers that are now catering to the most lux of the luxury market. For example, have you checked out what is happening in the yacht market recently? Sales of your 100- to 150-footers are down by as much as 50 percent from 2008, and that is just one indicator of the hidden suffering being endured by the merely rich.
In the same time period, however, yacht sales of your 300-footers, with price tags above $200 million, are at all-time highs. As noted by Robert Frank, a New York Times wealth columnist (yes, such a rarefied beat does exist), “For decades, a rising tide lifted all yachts. Now it is mainly lifting megayachts.”
“Whether the product is yachts, diamonds, art, wine, or even handbags,” says the Times‘ chronicler of American wealth, “the strongest growth and biggest profits are now coming from billionaires and nine-figure millionaires, rather than from mere millionaires.” What this reflects is not the widely acknowledged wealth divide between the 1 percenters and the rest of us, but a stunning concentration of America’s total wealth in the vaults of the ever-richer 0.01 percenters.
They are the elitest of the elites, an extravagant moneyed aristocracy, sitting so high above our society that they largely go unseen. This exclusive club includes only a tiny fraction of American families, with each holding fortunes of more than $110 million. The riches of these privileged ones keep snowballing — their outsized share of our national wealth has doubled since 2002, and their holdings are expanding twice as fast as other 1 percenters.
Their growing control of wealth is distorting high-end consumerism, including not just yachts, but private jets as well. Sales of your common millionaire-sized jets are down by two-thirds since the 2008 Wall Street crash. So jet makers have shifted to the billionaire buyers, including some who are spending eye-popping levels of lucre to possess such pretties as their very own Boeing 777-300 — which normally carries 400 passengers, rather than one gabillionaire.
Imagine how this makes people with only a few million dollars feel. This extreme, obscene concentration of wealth is creating an intolerable inequality that will implode our economy and explode America’s essential, uniting sense of egalitarianism. It’s important to remember that money is like manure — it does no good unless you spread it all around.
In the spirit of holiday harmony and good will toward all, I say it’s time for you working stiffs (and even those of you who’ve been badly stiffed and still can’t find work in this jobless economic recovery) to extend your hands in a gesture of solidarity with America’s millionaires. Let’s reach out to comfort our downcast brothers and sisters. Tell them, “We’re all in this inequality fight together,” and invite them to come to the next rally in your area to raise America’s minimum wage above the poverty level.
By: Jim Hightower, The National Memo, December 10, 2014
“The Millionaire’s Club Expands”: The Wealthiest 10 Percent Of Americans Own 75 Percent Of The Personal Wealth
The millionaire’s club isn’t what it used to be.
Time was that “being a millionaire” was a mark of unimaginable success. You’d joined the financial elite. People didn’t much discuss whether you arrived by wealth or income, because it didn’t matter much. The millionaire’s club was so small that the path to membership wasn’t worth discussing.
No more.
Millionaires aren’t as common as water, but there are plenty of them. A new study puts the worldwide total at 35 million in 2014, with about 40 percent (14 million) of them American. That’s about 5 percent of the U.S. adult population (241 million in 2014), or one in 20. Rarefied, yes; exclusive, no. After the United States, Japan has the largest concentration of millionaires with 8 percent of the world total, followed by France (7 percent), Germany (6 percent) and the United Kingdom (6 percent). At 3 percent, China ranks eighth.
The figures come from a study by Credit Suisse Research, which has been estimating worldwide personal wealth since 2010. The numbers reflect net worth, not annual income. The wealth totals add the value of people’s homes, businesses and financial assets (stocks, bonds) and subtract their loans. Doubtlessly, the number of millionaires would be much smaller if the calculations were based on income. In the study, an American with a $300,000 mortgage-free home and $700,000 in retirement accounts and financial investments qualifies as a millionaire.
On this basis, the study put global personal wealth in mid-2014 at $263 trillion, up from $117 trillion in 2000. Wealth in the United States reached $84 trillion, almost a third of the total. All of Europe, with a larger population, was virtually the same. Median wealth in the United States — meaning half of Americans were above the cutoff and half below — was $53,000, dominated by homes for many middle-class families. Japan’s total wealth was $23 trillion, but with a more equal distribution and a smaller population, its median was more than twice the American at $113,000. China’s wealth was $21 trillion and its median $7,000.
Credit Suisse did a special analysis of wealth inequality and, not surprisingly, found plenty of it. For starters, the analysis reminded readers that wealth inequality (basically, the ownership of stocks and bonds) is typically much greater than income inequality (basically, wages, salaries, dividends and interest).
In the United States, the wealthiest 10 percent of Americans own about 75 percent of the personal wealth, a share that’s unchanged since 2000; the income share of the top 10 percent is slightly less than 50 percent. But the study also found that wealth inequality is high in virtually all societies. Although the United States is at the upper end of the range, the low end is still stratospheric.
Consider.
In 2014, the wealthiest 10 percent owned 62 percent of the personal wealth in Germany; 69 percent in Sweden; 49 percent in Japan; 64 percent in China; 51 percent in Australia; 54 percent in the United Kingdom; 53 percent in France; 72 percent in Switzerland; and 68 percent in Denmark. These steep levels, the report noted, defied large cross-country differences in tax and inheritance policies.
There is, however, one country where wealth inequality is “so far above the others that it deserves to be placed in a separate category.” This is Russia. In 2014, the wealthiest 10 percent owned 85 percent of personal wealth. They aren’t oligarchs for nothing.
By: Robert Samuelson, The Washington Post, October 22, 2014
“Our Invisible Rich”: Most Americans Have No Idea Just How Unequal Our Society Has Become
Half a century ago, a classic essay in The New Yorker titled “Our Invisible Poor” took on the then-prevalent myth that America was an affluent society with only a few “pockets of poverty.” For many, the facts about poverty came as a revelation, and Dwight Macdonald’s article arguably did more than any other piece of advocacy to prepare the ground for Lyndon Johnson’s War on Poverty.
I don’t think the poor are invisible today, even though you sometimes hear assertions that they aren’t really living in poverty — hey, some of them have Xboxes! Instead, these days it’s the rich who are invisible.
But wait — isn’t half our TV programming devoted to breathless portrayal of the real or imagined lifestyles of the rich and fatuous? Yes, but that’s celebrity culture, and it doesn’t mean that the public has a good sense either of who the rich are or of how much money they make. In fact, most Americans have no idea just how unequal our society has become.
The latest piece of evidence to that effect is a survey asking people in various countries how much they thought top executives of major companies make relative to unskilled workers. In the United States the median respondent believed that chief executives make about 30 times as much as their employees, which was roughly true in the 1960s — but since then the gap has soared, so that today chief executives earn something like 300 times as much as ordinary workers.
So Americans have no idea how much the Masters of the Universe are paid, a finding very much in line with evidence that Americans vastly underestimate the concentration of wealth at the top.
Is this just a reflection of the innumeracy of hoi polloi? No — the supposedly well informed often seem comparably out of touch. Until the Occupy movement turned the “1 percent” into a catchphrase, it was all too common to hear prominent pundits and politicians speak about inequality as if it were mainly about college graduates versus the less educated, or the top fifth of the population versus the bottom 80 percent.
And even the 1 percent is too broad a category; the really big gains have gone to an even tinier elite. For example, recent estimates indicate not only that the wealth of the top percent has surged relative to everyone else — rising from 25 percent of total wealth in 1973 to 40 percent now — but that the great bulk of that rise has taken place among the top 0.1 percent, the richest one-thousandth of Americans.
So how can people be unaware of this development, or at least unaware of its scale? The main answer, I’d suggest, is that the truly rich are so removed from ordinary people’s lives that we never see what they have. We may notice, and feel aggrieved about, college kids driving luxury cars; but we don’t see private equity managers commuting by helicopter to their immense mansions in the Hamptons. The commanding heights of our economy are invisible because they’re lost in the clouds.
The exceptions are celebrities, who live their lives in public. And defenses of extreme inequality almost always invoke the examples of movie and sports stars. But celebrities make up only a tiny fraction of the wealthy, and even the biggest stars earn far less than the financial barons who really dominate the upper strata. For example, according to Forbes, Robert Downey Jr. is the highest-paid actor in America, making $75 million last year. According to the same publication, in 2013 the top 25 hedge fund managers took home, on average, almost a billion dollars each.
Does the invisibility of the very rich matter? Politically, it matters a lot. Pundits sometimes wonder why American voters don’t care more about inequality; part of the answer is that they don’t realize how extreme it is. And defenders of the superrich take advantage of that ignorance. When the Heritage Foundation tells us that the top 10 percent of filers are cruelly burdened, because they pay 68 percent of income taxes, it’s hoping that you won’t notice that word “income” — other taxes, such as the payroll tax, are far less progressive. But it’s also hoping you don’t know that the top 10 percent receive almost half of all income and own 75 percent of the nation’s wealth, which makes their burden seem a lot less disproportionate.
Most Americans say, if asked, that inequality is too high and something should be done about it — there is overwhelming support for higher minimum wages, and a majority favors higher taxes at the top. But at least so far confronting extreme inequality hasn’t been an election-winning issue. Maybe that would be true even if Americans knew the facts about our new Gilded Age. But we don’t know that. Today’s political balance rests on a foundation of ignorance, in which the public has no idea what our society is really like.
By: Paul Krugman, Op-Ed Columnist, The New York Times, September 28, 2014
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