The Income Gap Grows

The campaign for Mayor of New York City pits a Republican defender of the retiring billionaire, Michael Bloomberg, against a severe critic who is calling for higher taxes on the rich. The media is calling it “class war.”

A new analysis of the income gap suggests that may be plausible: Last year, the “top 1 percent took more than one-fifth of the income earned by Americans.”

A closer look at the recovery from the Great Recession, suggests how the rich have rebounded: “The new data shows that the top 1 percent of earners experienced a sharp drop in income during the recession, of about 36 percent, and a nearly equal rebound during the recovery of roughly 31 percent. The incomes of the other 99 percent plunged nearly 12 percent in the recession and have barely grown — a 0.4 percent uptick — since then.” The economists conclude: “Thus, the 1 percent has captured about 95 percent of the income gains since the recession ended.” (See, “The Rich Get Richer Through the Recovery.”)

The last time the income gap was this great, the world was convulsed with revolution, and governments toppled. In the 30’s, a vast army of unemployed marched to Washington and camped out on the Mall. The new president, Franklin Roosevelt, feared an insurrection. The Times noted in its account of this recent report that not only is the income gap growing but also the employment situation is not getting significantly better: “businesses are under no pressure to raise their employees’ incomes because both workers and employers know that many people without jobs would be willing to work for less.” It summed up the situation with another stunning statistic: “The share of Americans working or looking for work is at its lowest in 35 years.”

The idea of class war is looming up around the edges of our consciousness. It’s far from imminent, and it frightens people to go there. But as the Occupy Wall Street movement demonstrated two years ago, it doesn’t take much to spark an outbreak in this climate. A potential army is in reserve, over-indebted students, displaced former home-owners, the unemployed and underemployed, as well as uncounted angry citizens who see the system stacked against them.

This accumulated frustration and disappointment is hard to measure, but that hardly means it isn’t there. The rush to see the mayoral race in these terms is a sign, not to mention the increasing willingness of politicians to raise the issue. Charles Blow pointed out, “a Gallup poll released Thursday found that one in five Americans say they have struggled to afford food in the last year and that access to basic needs is near a record low.” He also cited a Pew Center poll that found, “fewer than 8 percent of respondents thought that, after the recent recession, government policies have helped the poor, the middle class or small business a great deal. About five times as many believe they’ve helped the wealthy, large banks and other financial institutions, and large corporations.” (See, “Occupy Wall Street Legacy.”)

Something is happening here.