Once again, more research confirms the rich getting richer.
The richest 1% see their income soar by 1,450 percent over a lifetime, compared to 38 percent for ordinary workers, while the top 5% see their incomes increase by 230 percent. The rich are getting richer at a breakneck pace, according to a new study from the National Bureau of Economic Research.
“Every year, the median worker between ages 25 and 55 experiences 1 percent annual growth,” one of the study's authors Fatih Guvenentold Bloomberg. “For the top 1 percent, it’s about 9 percent per year. And because of compounding, their incomes grow by fifteenfold.”
Americans blithely buy in to a socio-economic system of increasingly vast financial inequity because we believe – despite evidence to the contrary – that everyone still has the opportunity to succeed, new studiesby two Cornell psychologists have found.
“People have a deep desire to believe the economic system is fair, legitimate and just,” says Shai Davidai.
People believe there is more upward mobility than downward mobility. Evidence indicates otherwise. Americans overestimate the amount of upward mobility and underestimate the amount of downward mobility. Poorer people believe there is more mobility than richer individuals do.
The real income of the top 1 percent has risen 86.1 percent during the last two decades; the income of the remaining 99 percent of the population has increased only 6.6 percent, according to figures cited in the Davidai-Gilovich report. This rise in inequality has been accompanied by increasing hardship among those at the bottom. In 2010 the United States had almost 650,000 homeless people. And an additional 9.5 million families (46 million people) lived below the poverty line, a 50 percent increase since 1980.
"Americans as a whole do not seem as concerned as you might expect about this increase in income inequality," the authors write. "A strong faith in the possibility of upward mobility (along with relatively little concern about downward mobility) may dampen people’s reactions to prevailing economic inequality."
Author and anti-racism advocate Tim Wise AT the University of Northern Iowa challenged the myth of a meritocratic society, the idea that if individuals work hard enough they can succeed. He said he’s noticed a recent trend where the poor are shamed and the rich praised to a degree not previously seen, even in the midst of the recession.
Wise asked whether the audience truly believed the 37 richest people in the United States worked harder than the 157 million people who collectively have the same wealth as those 37 men and women. He concluded it’s an absurd belief. He pointed out at the height of the recession, there were seven people applying for every one job available, and yet there were complaints the unemployed were lazy. He noted economic mobility is at one of its lowest points in American history.
“And yet, faith in mobility is stronger than it’s ever been,” Wise said.