David A. Love: Gap between rich and poor threatens democracy

Gap between rich and poor threatens democracy
By David A. Love

March 8, 2006

America must get its priorities straight.

Several recent studies show that the income gap between rich and poor Americans is widening. The nation's wealth is under the control of fewer and fewer people, and this tide of inequality threatens democracy.

A study released in late January by the Center on Budget and Policy Priorities and the Economic Policy Institute found that the gap between the highest-income families and poor and middle-income families is significantly wider than it was 25 years ago.

The states with the largest gap between the top and bottom fifths are New York, Texas, Tennessee, Arizona and Florida.

Income gaps tend to be larger in the Southeast and Southwest, and smaller in the Midwest, Great Plains and Mountain states.

And in December 2005, a research paper by Ian Dew-Becker and Robert Gordon of Northwestern University, reported that between 1972 and 2001, the income of people in the top 1 percent grew by 87 percent. For people at the very top -- the 99.99th percentile -- the income gain was 181 percent. By contrast, the bottom 20 percent grew by only 3 percent.

What's more, an analysis of income-tax data by the Congressional Budget Office found that the top 1 percent of households owns almost twice as much of the nation's corporate wealth as they did 15 years ago.

These studies come amidst a growing push to increase the federal minimum wage. For the first time in nine years, it has stagnated at $5.15. In 18 states and 130 cities, groups have successfully lobbied for living wage reforms, which would raise the minimum wage based on a particular area's cost of living expenses. (Currently, a person earning minimum wage at a full-time salary makes only $10,700 a year. That figure is barely above the nation's poverty line for a single person.)

Economic equality ought to be a bipartisan issue. But many Republicans in Congress want to make permanent the president's tax cuts that benefit the wealthiest Americans. And members of Congress have given themselves a cost-of-living pay raise for the past six years in a row.

If more employers paid their employees a fair living wage, they could gain overall by absorbing the increase through decreased absenteeism, lower recruiting and training costs, higher productivity and increased worker morale.

And because the working poor spend most of what they earn, much of a potential minimum-wage increase would go back into the economy.

In 2004, 23 million people used food stamps, according to the U.S. Department of Agriculture, up from 17 million in 2000. And thousands of military families are living in poverty.

No longer can politicians sell the American people on the fallacy of trickle-down economics, which claims that throwing more money to the rich will eventually mean more money in the hands of those at the bottom.

Seven decades ago, President Roosevelt ushered in the New Deal to save capitalism from itself. In light of current trends, something once again must be done to reform America's unfair and unequal economic system.

The United States cannot exist as a democracy and an oligarchy at the same time.

David A. Love is a lawyer and writer based in Philadelphia. He can be reached at pmproj@progressive.org.