How The Income Gap Plays Out For Rich And Poor The gap between rich and poor has widened. Wealth is more and more concentrated among a select few, and those few are mostly white. The median wealth of white households is now 20 times that of black households, and 18 times that of Hispanic households, according to the Pew Research Center.

How The Income Gap Plays Out For Rich And Poor

How The Income Gap Plays Out For Rich And Poor

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The gap between rich and poor has widened. Wealth is more and more concentrated among a select few, and those few are mostly white. The median wealth of white households is now 20 times that of black households, and 18 times that of Hispanic households, according to the Pew Research Center.


Steven Greenhouse, labor and workplace correspondent, New York Times
Paul Taylor, executive vice president, Pew Research Center

NEAL CONAN, host: This is TOTN. I'm Neal Conan in Washington. At its heart, the promise of America has always been pretty simple: work hard, play by the rules, and you will do better than your parents. But as the economy continues to limp, the dream may be fading. The wealth gap in the country has widened and swallowed much of the middle class, while the top five percent, the very richest, get richer. And some get hit harder than others.

A new report by the Pew Research Center finds the median wealth of white households has grown to 20 times that of blacks and 18 times that of Hispanics. Almost every economist agrees we need some disparity to spur innovation and competition. Some argue the current gap is not as bad as it looks.

While people at the top have gotten richer, so have the people on the bottom. But what about that dream? Are you doing better than your parents? Call us, 800-989-8255. Email us, You can also join the conversation on our website. That's at Click on TALK OF THE NATION.

Later in the hour, a new documentary on white farmers forced off their land in Zimbabwe, "Mugabe and the White African." But first we're going to talk about are you doing better than your parents? And we'll begin with Ray(ph), and Ray's on the line with us from Tallahassee.

RAY: Hi, Neal.

CONAN: Hi, go ahead, please.

RAY: So yeah, I don't feel like I'm doing better than my parents. I have more education, but when I think back of the circumstances of my childhood, the house we grew up in, I would not be able to afford that house today.

CONAN: There are a lot of things, probably, in your house, your parents - well, they didn't exist when your parents lived.

RAY: True. I mean, computers and these electronic devices. But - and cable. But at the same time, you know, we were able as a family to take a vacation every summer. And, you know, my parents didn't have super jobs, you know. They had regular, middle-class jobs, what would have been considered middle class then.

I don't know if that would be considered middle class now, under the present economic reality, but it just feels like even though, you know, technology has advanced, there's so many more things that a person can do, it just seems that the breadth of economic activity doesn't exist to support a wide base of the population.

CONAN: And do you have kids, Ray?

RAY: I have one kid.

CONAN: And what about his or her future? What do you think about that?

RAY: So I think, you know, I think - I feel for the kids today because I feel like it's - this notion of a winner-take-all economy is being sort of ramped up, you know, sort of an atomic ramping-up of this idea. It's as if, if you're not - you know, if you're not basically participating in the very top of the economic sphere, in terms of your education, in terms of the kinds of jobs that you can get, then it's like everybody's at the bottom.

CONAN: Okay, Ray, thanks very much, and we wish you the best of luck.

RAY: All right. Let's see if we can go next to - this is Paul(ph), Paul with us from Panama City.

PAUL: Hey, Mr. Conan, good to speak to you again.

CONAN: Thanks for calling.

PAUL: I have to echo Ray's sentiments, to be honest. I'm marginally better off than my parents. It depends on what metric you use, but it's primarily because of personal choices.

But when we talk about the larger issue of the wealth gap, I'm not so concerned about the difference in wealth as I am about Americans' mentality about it.

If we take Bill Gates, for instance, sure he's, you know, worth billions and billions of dollars, but it doesn't hurt me. Actually, it benefits me with the inventions he's created. It makes my life easier.

However, that said, we have gotten to a point where I believe we're combining American exceptionalism with maybe crass commercialism, and it leads us into a society, I believe, where happiness is only for the high achievers. You know, it's a mentality of every man for himself, and no nation can survive long like that.

CONAN: Paul, that's a discouraging thought.


PAUL: I know, isn't it? Thank you very much. You have a good day.

CONAN: Appreciate the contribution. Joining us now is Steven Greenhouse, labor and workplace correspondent for the New York Times, also the author of the book "The Big Squeeze." He joins us from our bureau in New York and has many times when we talk about these kinds of issues. And Steven, nice to have you back on the program.

STEVEN GREENHOUSE: Nice to be here, Neal.

CONAN: The winner-take-all economy. Does that describe the American economy today?

GREENHOUSE: Somewhat - certainly more than it used to. I was looking at some statistics in preparation for coming here, Neal, and I see that, you know, for the average American household over the past 30 years, you know, the middle fifth, you know, income has gone up just 15 percent after factoring in inflation.

But for the folks at the top one percent, their income has gone up - has more than tripled over the past three decades. So, you know, if you're in the middle, you're really not going anywhere very fast. And, you know, the middle-income household is just, you know, $50,000, $60,000. That's what middle class is.

You know, here in New York City, as I talk, you know, a lot of people think gee, if you're making less than $200,000 a year, how can you survive? But, you know, people don't realize that, you know, the typical American household, their income's just $50,000, $60,000, and those people aren't taking, you know, vacations in Paris. Those people aren't driving Porsches. You know, a lot of them are just struggling to get by.

And I think one of the problems we've been seeing, Neal, is, you know, while the folks at the top, you know, are doing great, a lot of American folks, you know, have had to borrow hugely to get by. And they went, you know, way into debt. And when things, you know, went badly, you know, five years ago, the housing market crashed, you know, millions and millions of Americans are having their houses foreclosed upon and are in this big economic financial crisis that we as a nation are struggling to get out of.

And one of the reasons it's so hard to get out is the typical American family, the typical American consumer, you know, their income is not going up, and it's very hard, you know, for businesses to start hiring more when they feel that, you know, most Americans are not buying more, they really don't have an increase in income. So things seem very much stalled.

CONAN: And getting back to that dream, though, is it corrosive when the wealth gap is that large?

GREENHOUSE: If you're in the top one percent, you'd probably say no, it's not a big problem. But I think, you know, many people in the bottom - bottom half, many people in the middle class, you know, feel it's corrosive.

I think partly it's corrosive. They resent to see the top one percent, the top two percent, you know, doing much better. You know, I don't think they mind that, you know, Bill Gates, you know, as Ray said - or Ray or Paul said - or Steve Jobs is doing these wonderful things, creating these wonderful inventions, making life better for many, many Americans.

But on the other hand, I think a lot of Americans feel that while these CEOs are doing great, they're making 500, 600 times as much as the average, you know, worker, while they're, you know, shipping jobs off to India or to China, while they're, you know, keeping wages stagnant.

And at the same time, you know, I think people feel it's corrosive that, you know, people in the top two, three, four, five percent, you know, are doing very well, they're sending their kids to great private schools, whereas people in the middle class, people with, you know, with moderate income, they're, you know, unhappy with the quality of schools for their kids.

They say it's not fair that, you know, schools for my kids really aren't very good, and, you know, it's going to be hard for their kids to get into good colleges, perhaps, while, you know, people in the very top are often doing extremely well.

CONAN: Here's an email from Dan(ph) in Laramie, Wyoming: I do feel like I'm doing better than my parents, and my parents certainly did better than their parents. Three of my four grandparents were immigrants with little education. Both of my parents went to college and enjoyed decent careers. I've been fortunate to hold undergraduate and graduate degrees in engineering, and I am far ahead of where my parents were at my age.

And I guess that's as good a description of the American dream as you could find. This a comment from Mike(ph) in Portland: I have a master's degree. I'm working on another. And I will not be as successful financially as my parents, neither of whom finished a college degree.

My father left junior high school to work the family farm in 1938. The purchasing power of a single man appears to be dramatically less than it was when my father was able to buy a house and travel the world in the early 1980s as a schoolteacher. I have what I need, but owning a home as big as my parents or traveling as much as they did is beyond possible. Beyond possible, Steven Greenhouse?

GREENHOUSE: I think for many Americans it's true. I think, you know, in the 1950s, '60s and '70s, the United States really had kind of a golden economic age. There wasn't much competition from Japan or Germany at the time. We hadn't yet shipped all these millions of manufacturing jobs, you know, offshore. And we didn't have this big economic crisis yet.

And now, especially if you're just getting out of college now, it's just things are really tough. You know, I think Americans are better educated than ever before, a lot of, you know, very smart kids are getting out of college, but it's very, very hard to find a job. And I think a lot of people, 25, 28, 30 years of age are feeling that they're not attaining the same place at that age that their parents were.

You know, in the '70s and '80s - you know, '60s, '70s, '80s, a lot of parents, you know, the economy was doing pretty well. It was pretty easy to find a job. And I think it's been worse, Neal, in the Midwest where 20, 30, 40 years ago, there were lots of good, high-paying manufacturing jobs that offered good pensions and good health coverage.

And a lot of those jobs have disappeared, and the sons and daughters who might have been expecting to take those good middle-class jobs see that those jobs aren't there anymore, and they're often trying to figure out what they're going to do.

Some are getting good educations and finding good jobs. Others are getting good educations and not finding jobs. And others, you know, find themselves, you know, working at Wal-Marts or, you know, a local auto shop, or, you know, they're struggling to find something.

And I think those are the people like Ray and Paul, who say it's hard. You know, we're not sure that we're going to do better than our parents.

CONAN: Let's talk with Tom(ph), and Tom's on the line in Casper, another caller from Wyoming.

TOM: Hello.


TOM: The main thing that I wanted to say is I am better off than my parents at this point, and it has an awful lot to do with government programs that - at least some of which are looking to be cut, which concerns me greatly.

CONAN: Which ones in particular?

TOM: Social Security. Social Security is not just for retirees. It is also survivor's benefit. My father passed away sometime back in the late '60s, and I was able to afford to get an education from - because I got Social Security survivor benefits and VA benefits due to the fact that he was a World War II vet.

Now, I don't think that the, you know, VA benefits are being chopped. I don't know. I haven't paid that much attention to it.

CONAN: I don't so, and the growth of Social Security payments might be reduced a little bit, but I don't think they're much at risk, either.

TOM: Well, yeah. I think they're looking at cutting those in the future, and I think that that is the thing that worries me for the future generations. I think I'll probably be okay.

The other thing that I believe has helped me out is financial education.

CONAN: Oh, handling your money better.

TOM: Yes, exactly, and certainly I don't believe my parents had the benefit of financial education that I got, and a lot of it I really attribute to the company that I work for.

CONAN: Well, Tom, thanks very much for the call, appreciate it.

TOM: Thank you.


CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington. It's been a tough few years for what we used to call average Americans. At the top, though, many of the country's richest households are getting even richer. The recession not only increased an already growing income gap, we're talking today about what's driving the trend and how it's playing out among various groups across the country. More on that in a moment.

And what about the American dream? Are you doing better than your parents? 800-989-8255. Email You can join the conversation on our website. That's at Click on TALK OF THE NATION.

Our guest is Steven Greenhouse, labor and workplace correspondent for the New York Times, author of "The Big Squeeze: Tough Time for the American worker." Here's a couple of emails, this from Butch(ph): Definitely better. I'm a grad-school graduate. My parents were high school grads. I make three times what either of my parents ever made. But I'm $60,000 underwater on my house because of irresponsible lending practices and the housing bubble.

I played by all the rules, served my nation for 19 years and worked my butt off to have essentially a negative net worth. And this from Ronald(ph) in California: I believe I fared better than my parents, maybe. I'm an African-American, single homeowner. They are a couple.

My property in the Bay Area of California has plummeted in value. My parents' home in Detroit is still worth more than they paid for it. My parents will need Medicaid assistance sooner than anticipated. Their assets, like their home, will be seized for this assistance. So for all the years they invested in pursuing the American dream, they will end up with nothing.

My life is better because I know how to shield my assets. It's a dirty shame. Joining us now is Paul Taylor, the author of a new report from the Pew Research Center that looked at numbers in another way: how the wealth gap affects minorities. He's executive vice president of the Pew Research Center and joins us from a studio there. Nice to have you with us today.

PAUL TAYLOR: Nice to be with you.

CONAN: And your study found some stark disparities in terms of the wealth of white households versus those of Hispanic and blacks.

TAYLOR: That's right. We did our analysis based on newly available census data that most people can't get to. We have statisticians and economists who are able to look deep into the data.

It took a snapshot of 2009, and it found that the typical white household had 20 times more wealth than the typical black household and 18 times more than the typical Hispanic household. This is double the wealth disparities that prevailed among these three groups for the 25 years that the Census Bureau has been tracking such things.

And it is a result - the numbers are startling on their own. It's a result of the disparate impact of the Great Recession on these three groups, with minorities hit much, much harder than whites, mostly because of the impact of the housing meltdown.

CONAN: And as I look at the numbers again, from just a few years ago - it seems that the biggest fall has been among Hispanics.

TAYLOR: The biggest fall, what we find, we were able to take a snapshot from census data in 2005, and we find from '05 to '09 Hispanics lost 66 percent of their household wealth. Blacks lost 53 percent. Whites lost 16 percent. And again, the driver here is housing.

Relative to whites, blacks and Hispanics have many fewer financial assets. So household wealth is made up of your home, your car, if you have a 401(k), if you have stocks, that's all in the mix along with your mortgage, your car loan, your student loan, your credit card. So it's assets minus liabilities.

Blacks and Hispanics, to the extent they have assets, are much more tied up in their homes. Again, when the bubble burst, they got hit the hardest. The Hispanics sort of got a double whammy because in the '90s and early '00s, they tended to move towards economic opportunity, move towards the construction jobs in the hot real estate markets, whether it's Southern California, Arizona, Nevada, Florida.

Many of them became first-time homebuyers in that period. They bought at prices inflated by the bubble, and then when the bubble burst, it crashed most heavily on them.

CONAN: So an ebbing tide sinks some boats faster than others.

TAYLOR: That's correct.

CONAN: Steven Greenhouse, I know you follow this closely, and I know you also pointed out some regional anomalies, the Midwest hit harder, as Paul Taylor was just saying, obviously places like Nevada, California and South Florida as well.

GREENHOUSE: Yes, yes. You know, I congratulate Paul Taylor and Pew on a very interesting study. I think the study points to something else that's quite interesting. I mean, the asset - even before the recession, the assets for black and Hispanic households were very, very meager, just $18,000 for Hispanics, just 12,000 for blacks.

Hispanics' assets have dropped to about 6,000 from $18,000. For blacks, it's dropped to 5,600 from 12,000. So either way, the assets are not very high. And I think that points, Neal, to, you know, the underlying theme of the show, that there's great income inequality.

The top one percent of Americans own about 34 percent of the nation's wealth, and that one percent owns more than the bottom 90 percent in terms of wealth and assets, just 29 percent. And you asked, Neal, whether, you know, this has a corrosive effect.

I think, again, when, you know, when blacks, Hispanics, you know, people who are losing their homes, and blacks and Hispanics are losing their homes disproportionately, when they see, you know, bankers doing very well, when they see the top one percent doing very well, I think they feel real resentment.

I think one of the reasons, you know, poll numbers show that Americans are so pessimistic about the future, they're so angry about the direction of the country, is they feel that their wealth is going nowhere, they see that the unemployment rate remains quite high. They see that their general incomes are not going anywhere either.

CONAN: Let's get another caller on the line. This is Anthony(ph), Anthony with us from San Antonio.

ANTHONY: Yes, sir. My name is Anthony and I'm an American veteran. I was in the Army for four years, from '97 to 2001. I spent three years in Special Forces. My job in the military was (unintelligible) which is a military intelligence technician.

I got out of the military, got my diploma from college. My wife also has her diploma and has recently had to join the military just to find a job. I have been out for 10 years now and am probably going to have to go back into the military to find work.

I find it really interesting that my wife, through basic training, has seen probably half of the people that she has been going to basic training with have been college graduates, which just blows my mind, having been in and virtually no one being a college graduate when I went through.

And I would easily say that my wife and I aren't doing anywhere close to as well as our parents. And what I find most troublesome, especially with everything that's going on politically right now, is that one of the things nobody's talking about is that one of the reasons why our parents did so well was because their parents were paying such high taxes, which were being used to invest into the future of this country.

I mean, if I'm not mistaken, from 1950 to 1963, the top three percent in this country were paying virtually 91 percent of their income tax. And it just blows my mind that they're so upset over, you know, a 35 percent income tax.

CONAN: High rate, Steve Greenhouse, are his numbers right?

GREENHOUSE: Partially. The top marginal rate, you know, what you paid at the very, you know, top of your income, you know, was around 90 percent. Anthony is right. But, you know, for the first $100,000, say, of the millionaire's income, they might just be paying 20 or 30 percent.

Well, when you get up to their income in the three million or four million level, then they were paying 91 percent marginal rate on that. You know, I think, you know, Anthony makes a good point. One reason I think Americans are so resentful nowadays towards the idea of higher taxes is because their basic incomes are stagnating. And they feel why should I pay more taxes when my income is going nowhere, and they see that, you know, people at the tippy-top are doing extremely well.

And, you know, again you ask about corrosive effects here. I think one effect of all this, you know, income inequality is playing out right now in Washington over the debate over the debt ceiling. President Obama and the Democrats are saying they want a - you know, a plan that calls for - you know, a balanced plan that calls for shared sacrifice that would increase taxes on the top two percent.

And the Republicans, you know, who get a lot of their money from, you know, wealthy backers, are saying we're not going to support - we're not going to allow any tax increases. Obama says the only people we plan to increase taxes on are the top two percent. We plan to reduce taxes on other Americans by reducing the payroll tax.

But I think, you know, one of the corrosive effects here is what's happening in Washington in this big debate over whether to increase taxes on the top one or two percent. As we have more income and wealth inequities, maldistribution, you know, the people on top have more income and more political power, and they could lobby their folks in Congress all the harder to discourage them from agreeing to any tax increases on those at the top.

CONAN: I think Steven Greenhouse is broadly correct: People with a lot of money give that to Democrats too. It's not just one party. But Anthony, thanks very much for the phone call. And good luck.

ANTHONY: Oh, well thank you.

CONAN: This email from Tom in Two Harbors, Minnesota: While I make about as much as my parents did, the cost of health insurance and the burden of saving for retirement is higher for me. I also spend more on my children than my parents did. My kids could not have gotten college degrees without the loans that I took out and continue to pay on. Throw in cell phones, computers, athletic and band fees, and it is not hard to figure out why my parents took vacations and I do not.

This is from Lisa in Broomfield, Colorado: Dollarwise, yeah, my husband and I are better off than my parents were at our age, but my parents didn't carry the debt we do. We've taken advantages of our good credit. And while we're not drowning in debt, I don't think my parents ever bought a car on credit or refinanced their home.

This from Doris in St. Augustine: I am much better off than my parents ever were. My parents emigrated from Germany in 1952 with my sister. My father was a mechanical engineer, a brilliant man who changed jobs frequently to his income. They had no savings to speak of and a small pension. My husband owns his own business and supplemented that with a career in the National Guard, plus he served in the Florida legislature. He worked so much harder - he worked no harder than my father, but I fear he has been compensated better. Our standard of living is much greater than my parents were.

And this from Sandy in Goshen, Indiana: I think we need to think more broadly about what doing better means. I have a college education. My husband has two Master's degrees. We learned how to live within our means by our Depression-era parents, none of whom went to college. Though our house is not as nice as the ones I grew up in, we made our choice knowing that we needed to invest money in more beneficial ways. We chose to have one child who has learned to value education over money - at least so far. Quality of life involves our perceptions of what makes for happiness. Money helps, but that's not the entire picture for many of us.

And that's an interesting comment. But Steven Greenhouse, I think one of the things we're getting at is this perception of fareness that people think it is simply not fair that they work so hard and seem to be either spinning their wheels or heading downwards, at least according to Paul Taylor's statistics.

GREENHOUSE: Yes. I mean it's very interesting - you know, the letters, the emails you're getting, the callers are just fantastic with great, you know, very well-written, very well-told stories. And you know, one thing I'm hearing is that, you know, people whose parents were immigrants, they're generally doing better than their parents were. That's not surprising. I think for people who've been here, you know, whose family has been here several generations, maybe the third or fourth generation is not moving up as rapidly compared with their parents as people whose parents were immigrants. But I think, you know, I said before that according to this study by the Congressional Budget Office, for the typical, you know, middle class household, income has gone up just 15 percent after inflation since 1979.

And the main reason - some will say the only reason income has gone up for the average two-parent household is that, you know, both parents are working more hours. The women in the house is working many, many weeks more than was the case in 1979. So people feel that they're working harder and hardly doing any better. And I think there's a resentment. And people are wondering what happened to the American dream. They saw how, in the 1960s and '70s, Americans are doing so much better than, you know, Americans a generation before. But now people are asking, you know, am I going to do better than my parents? Are my children going to do better than I am? And I think that question is especially worrisome right now with the nation stuck in an economic rut for three or four years and unemployment still toying with the 10 percent level.

CONAN: We're talking with Steven Greenhouse of The New York Times and Paul Taylor of the Pew Research Center. You're listening to TALK OF THE NATION from NPR News.

And let's get Liz on the line, Liz with us from Pleasanton in California.

LIZ: Hi. I am the granddaughter of Mexican immigrants. My parents did far better than my grandparents, and I am doing far better than my parents. I do have concern for my children and their peers for a lot of the reasons that were talked about today, but also because my husband and I are in very upper middle class bracket. And I look at my son and his peers, and most of them have never done a day's work. They have the latest iPads and the iPhones. And I don't think they have an appreciation for all that they have and all that they are given, similar to how my parents or my grandparents all had to work for everything that they've had, and they appreciate and value that labor and what it equates to moneywise. And I just don't see it in this next generation, at least in my son's kind of class of friends.

CONAN: And is there, well, as you look at that, I mean it would have to be hard times, I think - how old is your son?

LIZ: He's his freshman year in college.

CONAN: Freshman year in college and is he - what's he studying?

LIZ: He is a biochemistry major. And I'm not as worried about my son so much. He seems to be on a pretty good path. But most of his friends are still at home, you know, with their cars their parents bought them and their iPads, you know, trying to find a job, but won't work at, you know, tasks they believe are below them, even though they've never really done a day's work in their life.

CONAN: Well...

LIZ: So I think there's a combination of factors here for the next generation.

CONAN: Liz, thanks very much for the call.

LIZ: Uh-huh.

CONAN: And I wanted to ask you, Paul Taylor, you've reported to us what these statistics are, and to some degree I think shocking to some degree. But as you think about it, I wonder what you've concluded. Is this wealth gap corrosive?

TAYLOR: Well, I would leave that to others. Certainly it is a stark reminder, if one were needed, that we do live in a country with enormous gaps in wealth, whether you measure it just by wealth inequality of all people or whether you cut it as we did in this report by race and ethnicity. Wealth, you know, Steven has been talking about income inequality and income stagnation, and that's been a fact of life in this country for the last decade or so. Wealth? Wealth is different from income.

Wealth is an accumulated stock of resources that plays a very profound life in - role in people's economic lives. It's a bulwark against short-term economic setbacks: you lose your job, you have an illness, you're draw on your assets. It's security for your retirement. It's a nest egg that you can pass along to your children and grandchildren so you can confer whatever advantages you've gained in life to the next generation. And the fact that you have gaps of 20 to one between the white majority and the two major minorities in this country, you know, it's a striking number. It's not a number that we've paid a lot of attention to, but it is a portrait of who we are in 2011 as a society.

CONAN: Paul Taylor, executive vice president of the Pew Research Center, author of a report published today, "Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics." He joined us from a studio at Pew. Thanks very much for your time.

TAYLOR: Thank you.

CONAN: And Steven Greenhouse, always good to talk with you.

GREENHOUSE: Always good to talk with you, always to be here. Thank you, Neal.

CONAN: Steven Greenhouse, labor and workplace correspondent for The New York Times, with us from our bureau in New York.

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