alternet | In the long term, the indirect effect of the Pay Machine—the
increase in income inequality—is economically more injurious than the
erosion of company earnings or a stock market downturn.
Income
inequality in America has risen sharply since 1976. Economists and
pundits point to multiple causes—globalization and competition from
low-wage countries; growing educational disparities that particularly
affect men and minorities; technological changes that reward the highly
skilled; decline of labor unions; changes in corporate culture that
place stock price and earnings above employees; free market philosophy
and the rise of winner-take-all economics; households with high-income
couples; lower rates of marriage and of intact families; high
incarceration levels; immigration of low-skilled individuals; income
tax and capital gains tax cuts and other conservative economic and tax
policies; deregulation; and decreased welfare and antipoverty spending
coupled with redistribution programs that disproportionately benefit the
elderly.
All of the above may contribute to inequality. However,
the proximate cause is quite simple. The jump in inequality is due to a
small number of people, mostly business executives, who make huge
amounts of money. They are the Mega Rich, the top .1 percent in income,
who averaged $6.1 million in income in 2014. The Merely Rich are the
rest of the 1 percent. It’s the Mega Rich, not the Merely Rich, who
drive inequality. (I’m a member of the Merely Rich, so don’t blame me.) Between 1980 and 2014 the average
real income of the Mega Rich has nearly quadrupled, increasing by 381
percent. Over the same period, the Merely Rich doubled their income
while the bottom 90 percent lost ground, suffering a 3 percent decline.
