An assistant professor of Legal Studies & Business Ethics at the University of Pennsylvania’s Wharton School of Business asked her students what they thought the average American worker makes each year and 25 percent of them thought it was over six figures.
One student actually believed the average American worker makes $800,000 per year, while the real number is closer to $45,000 or $65,000, depending on which source one uses or how ‘typical’ is defined.
In fact, the average American worker makes $51,480, based on 2021 U.S. Bureau of Labor Statistics data, and fewer than 31 percent of households earned more than $100,000 in 2020, according to Policy Advice, an insurance insights company.
The real median personal income in the U.S. in 2019 was $35,977 per year according to the U.S. Census Bureau, Real Median Personal Income in the United States, retrieved from the Federal Reserve Bank of St. Louis on February 13, 2022.
That means more than fifty percent of the U.S. workforce earned less than $35,000 in 2019, and figures from the Social Security Administration confirm it.
Part of the reason why the scholars are so wildly out of touch was suggested by New York Times data showing the median family income of a student at the university is $195,500.
Living on five or six times as much as ordinary people can stilt the views about those others, which is why the startling ignorance among people preparing for careers in business is disconcerting from a social perspective.
One observer who noted that members of Congress are paid about $174,000 per year, said that “sort of undermines their title as ‘representatives’ especially in light of the fact that millions of dollars are required to campaign effectively in modern elections.”
Lower-income adults were already under significant financial pressure, but they have been especially vulnerable to the economic fallout since the COVID-19 outbreak in 2020, according to a Pew Research Center survey conducted April 29-May 5, 2020.
That 2020 survey found that 36 percent of lower-income adults and 28 percent of middle-income adults said they had lost a job or taken a pay cut due to the coronavirus outbreak, compared with 22 percent of upper-income adults.
In a previous survey conducted in April 2020, only 23 percent of lower-income adults said they had rainy day funds that could last three months, compared with 48 percent of middle-income adults and 75 percent of upper-income adults.
When faced with a relatively small, unexpected, hypothetical expense of $400, such as a car repair or a modest medical bill, many families say it can be a hardship.
There has never been a more pronounced difference between rich and poor in America.
Americans in the top one percent receive 39 times more income than those in the bottom 90 percent.
But that pay gap pales in comparison to the divide between the nation’s richest 0.1 percent and everyone else. Americans at this lofty level are taking in over 196 times the income of the bottom 90 percent.
Once upon a time, capitalism was a vehicle to deliver widespread prosperity but the Republican Party turned the American economy against working people with Reaganomics, the failed policies based on widely discredited ‘trickle-down’ theories.
It had not always been successful at promoting shared prosperity but after the Wall Street crash of 1929, President Franklin Roosevelt implemented the New Deal, which set guardrails in place that averted financial panics and major recessions for about 50 years.
Reaganomics started with a cut in top income tax rates from 70 percent to about 26 percent, almost immediately tripling the national debt, but it did not end there and we are still pretending it works today.
Republicans in Congress convinced President Bill Clinton to repeal the Glass-Steagall Act, which separated commercial banking from investment banking, created the Federal Deposit Insurance Corporation, and kept things running smoothly since 1933.
Less than ten years after Glass-Steagall was repealed, the American economy was in shambles. President George Bush Jr. and President Donald Trump added more tax cuts for the rich, reducing revenue and pushing the national debt over $30 trillion.
Lisa McCormick is a progressive Democrat who has been critical of both sides of the political establishment and she has advocated plans to “reverse Reaganomics” citing the utter failure of this magic formula to increase government revenue, produce good jobs or allow society to maintain itself.
“Our crumbling infrastructure, insurmountable debt, and the massive inequality in our society are direct results of Reaganomics,” said McCormick, who has publicized a chart (above) showing how working-class Americans’ pay has failed to keep pace with economic productivity.
As long as graduates emerging from private Ivy League research universities and the politicians who supposedly represent us remain clueless about the lifestyles of average American workers, then it will be unsurprising that one of every nine full-time employees are paid wages that can leave them in poverty.