Why are there 40 million people in the US living below

The Poverty Line?

In case you didn’t know it, there are 40 million people in America living below the poverty line.  The country’s population is 327 million, which means that the poor amount to 12.2% of the population in a very rich country. 40 million is equivalent to the population of California. The median income for a worker is $46,800 annually. On the other hand, it has been said that you need at least $150,000 annually to live comfortably in the U.S., which means that you need to be in the top 10% of earners.  The gross national income is $20,837,347,000,000, which if you divide it by the population is $63,722.  This shows that the population above the median earns a lot more than the average person.  The top 10% of earners earn an average of $118,400, taking 39.1% of all the income (2019). The top 0.1% get $2.757 million, raking in 5.2% of all the income.

Between 1979 and 2017, the wage income of the bottom 90% of the population increased by 22.2%  (but don’t forget that the income of the bottom 50% hardly increased at all). The income of the top 1% went up 157.3%.  And the income of the top 0.1% went up 343.2%.  This is wage income only and does not include investment income.

69% of Americans have less than $1,000 in savings. 

So how is it that there is such a great disparity of income and wealth in the U.S.?  We can just look at that figure in which 69% of the population has less than $1,000 in savings and work it out.  The lower part of the population, therefore, takes in income but virtually all of it is expended on living expenses.  On the other hand, the 0.1% at the very top take in $2.757 million, and yet how much more can their ordinary living expenses be?  If the medium income for a worker is $46,500, and that worker expends all of his income, does the one at the very top need $200,000 to live?  And, if so, what happens to the remaining $2.557 of his income?

The traditional response was that those people invested their income, built businesses, and this caused the economy to expand, all to the benefit of the lower 90%.  This was the “trickle-down economics” theory. But it isn’t real. If the wage income of the lower 90% went up only 22.2% in 38 years, that’s only .68% per year.  And let’s not forget that prices have increased substantially during that period.

So all that has happened is that the top earners accumulate more and more wealth, while the bottom does not and cannot.  “Wealth — the value of a household’s property and financial assets, minus the value of its debts — is much more highly concentrated than income. The best survey data show that the share of wealth held by the top 1 percent rose from just under 30 percent in 1989 to nearly 39 percent in 2016, while the share held by the bottom 90 percent fell from just over 33 percent to less than 23 percent over the same period.”  

Therefore, wealth is concentrated at the top, far more than income, and the wealth at the top increased so that the very wealthy increased by 25% their share of total national income, while the share of the 90% at the bottom fell by nearly a third.

None of this should be a surprise, because if you have a huge income and need relatively little for your ordinary living expenses, your wealth is going to increase quickly, while the poor will go downhill.

It’s not just disparities in income.  The income of the lower 90% goes down because jobs are exported to poorer countries and because of the increase in automation.  So the overall system results in increasing income and wealth inequality.

And, from that, we have increasing political inequality.  The very wealthy have learned that they can buy the politicians, and with their increasing wealth, they can do it more and more.  The only answer to that is to support the few politicians (such as Bernie Sanders) who refuse to take PAC money or money from the wealthy.  About the only thing in America that is fair is that (in theory at least) everyone has a vote, and the poor could outvote the wealthy. Of course, many of them are denied the right to vote, and even more of them are dissuaded from voting in their own best interests by the propaganda which the wealthy dump on them.  So it takes hard work to change the system.

Short of a revolution (and Americans are notoriously bad at revolutions), the only way to take the power needed to change the economic system is through the political system.  But the Republican Party is almost completely set against dramatic change, and the Democrats have a substantial component set against it. The hope is that the non-voters (which are substantial in number) will come out and vote for a progressive platform, assuming that the Democrats will offer one.

“According to a Gallup poll from January 2019, 40 percent of women under the age of 30 would like to leave the United States.”  “As of June 2016, the State department’s consular section estimated that there are 9 million non-military U.S. citizens living abroad, an increase from the 4 million estimated in 1999.” As an ex-pat American living in Mexico, I know that there are a large number of emigrants living here for economic reasons.  My family and I had no connection with Mexico before the first of us came here., and that is true of many others.

If change can be achieved, it should be a combination of substantial taxes on those with wealth, and programs that offer essential elements of a good life to all in the society.  In other words, Medicare for All, Education for All, improved and low-cost housing, as well as the other elements in the Bernie Sanders platform.   What he is proposing isn’t really socialism, but just an improvement on the FDR “New Deal.”  And that is very worthwhile as a solution to the inequality that is ruining our country.