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We’re More Unequal Than You Think

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RKO/Photofest
Lionel Barrymore, Frank Hagney, and James Stewart in Frank Capra’s It’s a Wonderful Life, 1946

Frank carries this a step further. In recent years, he argues, the products and enjoyments set before us have become increasingly enticing—including houses, vacations, television programs, video games, electronic devices, and the attractions of the Internet. In many cases, the rich acquire them first; since what they have and do becomes widely known, emulation descends down the line.

Nor are these just Tiffany trinkets. Frank’s most vivid examples are newly built houses. As the very rich installed grander entrance halls and rarely used bathrooms, the professional classes felt they should have a semblance of such amenities. “By 2007,” Frank writes, “the median new single-family house built in the United States had an area of more than 2,300 square feet, some 50 percent more than its counterpart from 1970.” Indeed, it’s revealing that this expansion was happening as people were having fewer children. However, these homes—along with more elaborate wardrobes, holidays, and technical gear—are costly. If they were to be bought, salaries needed to keep pace.

Hence, I would argue, an unstated but still real compact was made between the employers and the new upper-middle class. Their pay would be raised to support their ascending status. As the samplings in Table B show, while real earnings for the overall workforce have risen only 7 percent since 1985, professions like physicians and professors have done several times better. Incomes of lawyers and executives, for their part, have soared much further than anyone would have forecast a few decades ago.2

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Rationales aren’t lacking for these raises. One is that skills and talents are in short supply for such jobs as video game designers, so higher pay must be proffered to get and keep the better performers. But a more plausible reason is that money to push up pay was becoming available as profits generally increased, and lower-level jobs were increasingly performed by workers abroad. So a tacit compact came into play. Health plans gave doctors most of what they billed, with few questions asked. Colleges, knowing that parents would pay, found they could increase tuition and fees, much of which went to boost the pay of those fortunate to be full-time faculty. Corporate clients didn’t object to higher legal fees, at least for top partners, since their overall labor costs were less.

Here Thomas Edsall provides useful information. “US multinational corporations cut domestic employment by 2.9 million during the 2000s, while adding 2.4 million workers overseas,” he writes. At the same time, “recession-forced layoffs resulted in increased productivity, which in turn translated into higher profits with fewer workers.” In this setting, clubby corporate boards approved eight-figure pay packages to their CEOs, which were seen as affirming the stature of their firms. In these and other instances, accepted standards for corporate compensation went by the board. No one asked what might be a competitive rate for whatever skills were needed; or if there might be equally talented people who would do just as good a job for less.

The crucial fact is that the upward flow of money has reduced the spending power of those lower down, most notably the bottom 60 percent. This loss has had consequences. For example, in a not-so-distant past, families of modest means made enough to put something aside for their children’s college fees. That cushion is gone, which is why millions of undergraduates are now forced to take much larger loans. Adding interest and penalties, many will face decades paying off six-figure debts. By way of contrast, parents in the top 5 percent can write full tuition checks, which gives their children an edge in admissions decisions, even if colleges deny this.3

3.

James Gilligan has written a quirky book that deserves to be taken seriously. His exposition is based primarily on public statistics, and he uses the numbers responsibly, always allowing for alternative interpretations. His book isn’t explicitly about economic inequality, but something graver: death, and its two most dramatic causes, suicide and homicide. Yet even here, how the economy functions is crucial. Gilligan starts with figures on these two ways life may end, for which we have reliable records going back to 1900. The numbers start with county coroners, are forwarded to state health agencies, and are finally collated in federal reports. To be sure, not all deaths have clear-cut causes. We can’t always be sure if ingesting too many pills was accidental or intentional, just as a road fatality can be a means of suicide. Gilligan is aware of ambiguities like these and factors them into his equations.

Still, his initial step may raise some questions. For each year starting with 1900, he adds homicide and suicide rates together to yield a “violent death rate,” which becomes the principal variable in his analysis. True, a carbon monoxide suicide is in a sense a violent act; but it’s not in the same category as plunging a knife into someone else’s chest. Gilligan acknowledges the differences in the two kinds of deaths, but they also overlap. At least a few of those who choose to carry lethal weapons know they are rolling dice with their own lives.

The two modes of death involve different groups of people. In 2007, the most recent for figures, there were 34,598 suicides and 18,361 homicides. As it happens, men accounted for precisely 79 percent of both groups of victims. However, relative to their numbers, whites were almost three times as likely as blacks to take their own lives, while blacks had an eight times greater chance of being killed by someone else. Altogether, 56 percent of the men used firearms to end their lives; so did 30 percent of the women.

What makes Gilligan’s analysis interesting is his view that the two forms of death have many parallels. Suicide, he argues, may be seen as “self-punishment,” the sternest possible reproof, but inflicted on oneself. In a not wholly dissimilar vein, “aggressive behavior toward other people, which can escalate to homicide,” is often impelled by resentment over not receiving respect felt to be one’s due. (Shots have been fired over parking spaces.) Both sets of feelings are exacerbated, Gilligan argues, when social conditions swell the pool of people who are made to feel “worthless,” “shamed,” and “redundant.”

According to his calculations, “epidemics of lethal violence” are closely correlated with the party affiliation of the president. In the 107 years following 1900, Republicans held the White House for fifty-nine of them, leaving forty-eight for Democrats. He found that for all but fourteen of the 107 years, his combined homicide-suicide rate fell when Democrats were president and rose under Republican administrations. (Eisenhower and Carter accounted for twelve of the fourteen exceptional years.)

Gilligan’s most specific surmise is that these linkages result largely from unemployment, which tends to rise under Republican presidents. An inability to find a job, he says, is the foremost driver of feelings of shame and worthlessness. (If this pattern persists, unemployment and violence-related deaths will rise even further if we have a President Romney.) It’s obvious that the 52,959 suicides and homicides recorded in 2007 were a minute fraction of the seven million out of work that year. Gilligan, a professor of psychiatry at NYU, conjectures that “they are the tip of the iceberg…underneath which are many times more people who suffer grievously from these stresses but do not respond to them by killing others or themselves.”

Gilligan also shows that states usually carried by Republicans have higher homicide and suicide rates, as well as inflicting more deaths in the form of executions. But he doesn’t relate this to the job market in these states—an important omission. He considers another explanation. Republicans muster their majorities from just above the median, pitting “members of the lower middle class against the very poorest lower class.” So when they take power, they are basically telling Americans who are first to be fired that they no longer count. What I take Gilligan to be saying is that those who are subject to the humiliations of being poor at least sense that when a Democrat is in the White House someone there cares more than would be the case if there were a Republican. This is class analysis with a new twist.

Well, we now have a Democratic president, with three years of high jobless rates. We don’t yet have suicide statistics for 2009 and 2010. But figures for homicides are available from the FBI, which collects them from local police departments. In 2009, the national rate for the FBI combined “murder and manslaughter” rate was 5.0 per 100,000 in the population, and in 2010 it dropped to 4.8 per 100,000. By way of contrast, those rates during George W. Bush’s eight years averaged 5.6 per 100,000. Thus far Gilligan’s inferences are standing up. Despite disheartening levels of unemployment, having a Democratic administration correlates with a moderately declining murder rate.

While Gilligan doesn’t discuss income inequality explicitly, he argues that one of our major parties has no real concern for those below the economic median. Here his book complements the other three. If the Republicans win the presidency, it will be largely with votes from the upper half of the electorate, which provided their needed margin in the 2010 contests.4 Using this base, the GOP claims that the rich must be cosseted because they are “job creators.”

What isn’t said is that its business supporters seek the cheapest possible workforce—domestic, immigrant, or foreign—because bonuses and profits rise when payroll costs are low. If this strategy succeeds, the Americans who are most desperate for jobs will face a future as casual labor. (The college “adjuncts” who are poorly paid to do much of the teaching formerly done by upper-middle-class professors are one white-collar harbinger.) Like other overleveraged nations, the US may well be facing Thomas Edsall’s “age of austerity.” If so, it remains to ask who will be making most of the sacrifices. Americans have votes and voices; much of the decision will rest with them.

  1. 2

    Frank argues that Darwin’s natural selection better explains the results of competition than Smith’s invisible hand. To underwrite the “common good”—for which he finds scant concern in Darwin—he would impose onerous taxes on “positional” (i.e., conspicuous) consumption like lavish “weddings and coming-of-age parties.” 

  2. 3

    According to The Princeton Review, of the 15,141 students admitted by ten highly competitive colleges last year (the Ivy League plus Stanford and Duke), 48.8 percent were able to pay the full bill, which averaged $53,158. 

  3. 4

    See my ” The Next Election: The Surprising Reality,” The New York Review, August 18, 2011. 

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