Remarks of David A. Stockman at the Edmond J. Safra Center for Ethics, Harvard University, September 26, 2013
The median U. S. household income in 2012 was $51,000, but that’s nothing to crow about. That same figure was first reached way back in 1989 – meaning that the living standard of Main Street America has gone nowhere for the last quarter century. Since there was no prior span in U. S. history when real household incomes remained dead-in-the-water for 25 years, it cannot be gainsaid that the great American prosperity machine has stalled out.
Even worse, the bottom of the socio-economic ladder has actually slipped lower and, by some measures, significantly so. The current poverty rate of 15 percent was only 12.8 percent back in 1989; there are now 48 million people on food stamps compared to 18 million then; and more than 16 million children lived in poverty households last year or one-third more than a quarter century back.
Likewise, last year the bottom quintile of households struggled to make ends meet on $11,500 annually –a level 20 percent lower than the $14,000 of constant dollar income the bottom 20 million households had available on average twenty-five years ago.
Then, again, not all of the vectors have pointed south. Back in 1989 the Dow-Jones index was at 3,000, and by 2012 it was up five-fold to 15,000. Likewise, the aggregate wealth of the Forbes 400 clocked in at $300 billion back then, and now stands at more than $2 trillion – a gain of 7X.
And the big gains were not just limited to the 400 billionaires. We have had a share the wealth movement of sorts – at least among the top rungs of the ladder. By contrast to the plight of the lower ranks, there has been nothing dead-in-the-water about the incomes of the 5 million U. S. households which comprise the top five percent. They enjoyed an average income of $320,000 last year, representing a sprightly 33 percent gain from the $240,000 inflation-adjusted level of 1989.
The same top tier of households had combined net worth of about $10 trillion back at the end of Ronald Reagan’s second term. And by the beginning of Barack Obama’s second term that had grown to $50 trillion, meaning that just the $40 trillion gain among the very top 5 percent rung is nearly double the entire current net worth of the remaining 95 percent of American households.
This post was published at David Stockmans Contra Corner by David Stockman ‘ September 21, 2014.
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