By Karen Petrou
- In 1975, the rewards of national economic growth were evenly distributed regardless of income. By 2018, most Americans lost their fair share based on per capita GDP.
- The cost of lost income due to increased inequality to the bottom 90% over this period amounts to $2.5 trillion compared to what it would have been if GDP had remained as equitably distributed as it was before 1975.
- Looked at another way, the majority of U.S. workers never shared in the economic growth from 1975 to 2018.
- It may seem that racial disparities in U.S. income improved over this period, but this wasn’t the result of a society become more fair, if not also economically more equal. In fact, racial disparity dropped not because Black male workers with below-median income held their own, but because white men did worse than before. The same phenomenon erases what appears to be a drop in the gender gap for working women who did a bit better – largely due to more working hours – than men.
- Fed policy premised on aggregates and averages as well as the benefits of GDP growth without regard to distributional realities is not only doomed to fail, but sure to continue to exacerbate inequality.