America’s economy has almost doubled in size over the last four decades, but broad measures of the nation’s economic health conceal the unequal distribution of gains. A small portion of the population has pocketed most of the new wealth, and the coronavirus pandemic is laying bare the consequences of the unequal distribution of prosperity.
Consider first the most commonly quoted measure of the nation’s success — gross domestic product — in the chart below:
G.D.P. measures a country’s total output. In the U.S., it has risen 79 percent since 1980, after adjusting for inflation and population growth. Over the same 40 years, the after-tax income of the bottom half of earners has risen only 20 percent. The after-tax income of earners near the middle has also badly trailed G.D.P., rising only 50 percent. But for the very wealthy, the story is completely different. Their after-tax incomes have risen much faster than G.D.P. — up 420 percent since 1980.
Inequality didn’t cause the coronavirus crisis. But it is making the crisis much worse, having created an economy in which many Americans are struggling to get by, and are vulnerable to any interruption of work or income and any illness.
On this page, we present dozens of ways to look at American life that together provide a more meaningful picture than G.D.P. There is reason to expect that many of these indicators are already beginning to look worse, as the country grapples with both a pandemic and a recession. Together, they also help show the areas in which Americans will struggle to recover from this crisis.
Incomes have stagnated. But not for the rich.
One way to think about the rise in inequality is to imagine how different the economy would be if inequality hadn’t soared over the past 40 to 50 years. In that scenario, with the same G.D.P. that we have today but with 1980 levels of inequality, every American household in the bottom 90 percent of income would be earning about $12,000 more — not just this year, but permanently.
In effect, each household in this bottom 90 percent is sending a check for $12,000 to every household in the top 1 percent, year after year after year.