America's Inequality Time Bomb: Time to restore the vision of a society of equal opportunity for all.

• Author: Ullmann, Owen

Even before the Covid-19 pandemic struck, economic inequality in the United States was growing at an alarming rate. According to a November report by the Peterson Institute for International Economics, "How to Fix Economic Inequality," the United States has the greatest income and wealth inequality among the twenty-seven advanced nations that belong to the Organization for Economic Cooperation and Development.

Particularly worrisome, the report noted, is the contraction of the middle class, the backbone of the American experiment based on the concept of equal opportunity for all. It has dropped from 61 percent of the population in 1971 to 51 percent in 2019.

That trend is echoed in an October report by the nonpartisan Congressional Budget Office. It found that the inflation-adjusted average household income of the top 1 percent, after taxes and government benefits, rose 226 percent from 1979 to 2016. Income for the remainder of the top quintile rose 79 percent, and that of the bottom 20 percent rose 85 percent, aided by government safety net programs. And the majority of the U.S. population classified as middle- and lower-middle class? Their income rose a mere 47 percent over the same period, according to the CBO.

As bad as those numbers are, the inequality gap is accelerating faster in the United States than in any other OECD member as a consequence of the pandemic. That's because unemployment has been greatest among lower-wage workers in severely hobbled service industries, while highskilled employees have been barely nicked. In addition, upper-income families have profited from huge gains in the stock market in 2020 after a brief collapse at the start of the pandemic last winter. Lower-income groups have scant or no investments in the stock market, and housing prices--the greatest asset for many is their homes--are still recovering from the housing collapse during the Great Recession of 2007-2009.

The dual growth of income and wealth inequality not only makes a mockery of the promise of the American Dream--that hard work and determination will lead to economic success--but it has given rise to the bitter political polarization and distrust of American government that we are experiencing. Who wouldn't have contempt for a political establishment filled with privileged elites who grow richer while so many Americans are falling further behind?

There is no lack of proposals for stemming and even reversing this trend, which, if left unchecked, threatens to lead to even greater social upheaval. The problem is that our politicians in Washington have proven unwilling to make commonsense compromises that would start closing the inequality gap.

Here, dear lawmakers, are some of the policy prescriptions that would help:

ADDRESSING INCOME INEQUALITY

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