Rich folks adding to their edge

April 17, 1995|By New York Times News Service

WASHINGTON -- New studies on the growing concentration of American wealth and income show that, rather than being an egalitarian society, the United States has become the most economically stratified of industrial nations.

The economic and statistical research to be published soon shows that in 1989, the latest year for which data were available, the wealthiest 1 percent of American households -- with assets worth $2.3 million each -- own "nearly 40 percent of the nation's wealth."

The top 20 percent of households, with assets of $180,000 or more, own 80 percent of America's wealth, the figures show.

In contrast, the richest 1 percent of the British population own about 18 percent of the wealth.

Many of the new studies are based on the data available then, but provide new analyses that coincide with a vigorous debate in Congress over provisions in the Republican "Contract with America."

Indeed, the drive by Republicans to reduce federal welfare programs and cut taxes is expected, at least in the short term, to widen disparities between rich and poor.

Income statistics are similarly skewed. At the bottom end of the scale, the lowest-earning 20 percent of Americans earn only 5.7 percent of all the after-tax income paid to individuals in the United States each year. In Finland, a nation with an exceptionally even distribution of income, the lowest-earning 20 percent receive 10.8 percent of such income.

The top 20 percent of American households in terms of income -- $55,000 or more -- have 55 percent of all after-tax income.

"We are the most unequal industrialized country in terms of income and wealth, and we're growing more unequal faster than the other industrialized countries," said Edward N. Wolff, an economics professor at New York University. He soon is to publish two papers comparing wealth patterns in Western nations.

Liberal social scientists worry about poor people's shrinking share of the nation's resources, and the consequences in terms of economic performance and social tension.

Margaret Weir, of the Brookings Institution, called the higher concentration of incomes and wealth "quite divisive," especially in a country where the political system requires so much campaign money.

"It tilts the political system toward those who have more resources," she said, adding that financial extremes also undermined the "sense of community and commonality of purpose."

Some express skepticism about the statistics or their significance.

Marvin H. Kosters, an economist at the American Enterprise Institute in Washington, said he thought the gap, as measured, was being used as a false villain. "I think we have important sociological problems," he said, "but I don't think this gets at it all that well."

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