U.S. economic recovery over the last three years worked in two ways, with a revenue increase for the richest 1% of the population and a revenue drop for the poorest 80%, a situation which highlights the widening disparity between social classes that make up the largest world economy.
In 2010, the richest 1% of U.S. households have accumulated about 93% of the total increase in revenue recorded in the economy, according to a recent study by Emmanuel Saez, an economist at the University of California – Berkeley, based on data from the IRS, according to Bloomberg.
The 1.2 million households that make up 1% of the richest Americans last year showed an increase of 5.5% of revenues, compared to an average decrease of 1.7% for the 96 million families with income below $101,583 per year, representing 80% of the population, according to U.S. Census Bureau, quoted by Bloomberg. The economic recovery that started in mid-2009 doesn’t seem to have a positive effect for most Americans.
Last year, the gap between the richest Americans and the rest of the population has grown at the highest level in over 40 years, exceeding the degree of inequality in countries such as Uganda and Kazakhstan, according to Bloomberg data. During the past decade, the income of “average family” in the U.S. fell for the first time since the Second World War.
The economic recovery has helped more those who hold shares than homeowners. Amount of outstanding shares increased by $6,000 billion since June 2009, considered the end of recession caused by the global financial crisis, to $17,000 billion. Despite the recent price recovery in the housing market, the value of the owner-occupied housing, the main asset of most middle class families up fell by $41 billion over the same period, as the value lost since 2006 is $5,800 billion.
“Income inequality of the scale we have today is destroying our democracy,” said Bob Crandall, former CEO of American Airlines, in an interview with Bloomberg. He advocates tax increases, criticizing the “selfishness” of rich people in America.
Economic recovery generated in the U.S. since February of 2010 a total of 4.6 million jobs in the private sector, but most occurred in areas such as hospitality, where companies rely on temporary contracts, with a low average salary, according to a report published in September by Mark Vitner, senior economist at Wells Fargo Securities.
Growing income gap between the richest and the standard of living of the general population is, along with unemployment, one of the main topics of debate in the race for the presidential election in November, played between incumbent President Barack Obama and the Republican Party nominee, Mitt Romney.
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