Tagged: Income Inequality

Stop punching down.


When the fast food workers wanted the minimum wage raised to $15 an hour, the urge was to punch down. Backlash was swift. It was mean. It was dismissive. When discussion turns to welfare benefits, the urge is to punch down. People on welfare are seen as gaming the system. They’re cheaters. They’re lazy. They’re taking handouts that the rest of us are working to pay for. And they do not deserve what they get. We’re always punching down at the people who have so little and ignoring those who perpetuate our currently stratified socioeconomic reality.

Why is this?

I’m not a psychologist, so I won’t attempt to unpack the nuances of the human mind, but I’m observant and I interact with a lot of people, so I will venture some [unscientific] guesses. If I had to guess, I’d guess several reasons are in play. First, the idea that just about anyone could slide to the bottom of the socioeconomic totem pole through bad luck or well-intentioned mistakes is terrifying. None of us wants to believe that we’re a job loss, a health scare, a natural disaster away from poverty or homelessness. If we accept that most of those who are asking for a higher minimum wage and most of those who depend on welfare are not in their positions through any direct fault of their own, we have to accept that we could be in those positions too. And we don’t want to do that. Because it’s terrifying. Second (and it’s related), we like to feel like we have control. Control over ourselves and our lives, yes, but also control over those around us. People we perceive as lesser, we also perceive as having significantly less power. It’s a bully mentality. We feel like we can push them around. We don’t want these weaklings taking our resources. If we hit out at them due to our frustration at the system, they can’t hit us back. Third, we’re obsessed with “fairness” and consumed with a general fear that someone is going to take our stuff away from us. My sense is that this narrative is perpetuated by those at the top who like to encourage this sort of social divide because they benefit from it, but whatever the case, our general knee-jerk outrage reaction to the idea that what’s ours is at risk of becoming someone else’s motivates us to punch down like crazy, with impunity, and without critical thought.

Now, more than ever, it is imperative that we stop proverbially shitting on everyone we perceive as being beneath us. It has no effect but to breed resentment and allow the totem pole’s higher-ups to get away with treating us all horribly.

It’s helpful to look at data regarding poor people. It’s also helpful to recognize the impact of something as small as where you were born and to whom you were born. We like to think that we’re all self-made and that if we managed to sweat and tear our way to relative success, anyone can. On the one hand, I could say “Look at me, I came out of undergrad, worked for three years, and decided I wanted to go to law school. I did the leg-work of researching schools, I found time to study for the LSAT, and I took it. I applied to schools, compared acceptances, and picked a school that gave me a full scholarship. Then I worked hard, got reasonable grades, took and passed the bar, and landed a job I really, really wanted. All through my own power!”

I could say that.

But that’s only a small part of the picture. I was born into a family that had the resources and the mission to make sure I would succeed. I was never hungry. I was always clothed. My parents sacrificed for my success. They shouldered the financial burden of my undergrad and let me remain on their health insurance until I turned 26. When I went to law school, I got a full tuition scholarship, yes, but I also had to cover cost of living. I took out a few relatively small loans, but then my parents also “loaned” me money every year to help defray costs (I say “loaned” because after my three years, they forgave those loans). After I graduated, my now husband wiped out my ~$20,000 of debt. I was debt free. This allowed me to choose a job that doesn’t pay a huge amount, but that will also (hopefully) open the door to incredibly opportunities down the line.

The takeaway? Yes, I worked hard. Yes, I pulled my weight. Yes, I was motivated. No, I did not do it singlehandedly. And that’s the truth for the vast majority of us. To my eye, there seems to be a correlation between the level of privilege and the degree to which we are willing to admit we had a huge leg-up; i.e., the more privileged we are, the more we want to be able to say “WE DID IT OURSELVES. Now you do it.”

Not only is that wrong, but it perpetuates a myth and props-up a system designed to keep those without resources down at the bottom.

The income gap in the US is widening. As of December 2016, the top 1% earn an average of $1.3 million a year, which is more than three times as much as in the 1980s, where the average was $428,000. But those at the bottom aren’t making any more money than in the 1980s. The bottom 50% of the American population earned an average of $16,000 in pre-tax income. This has not changed in over three decades.

And those of us who are “millenials?” We only have a 50% shot of making more than our parents. This is radically different and in stark contrast to the economic realities of the 1940s. Children born in 1940 had a 92% chance of making more money than their parents. In 50 years, this percentage has fallen to 50%. Not particularly reassuring for any of us.

The top percent of earners area also consistently taking a bigger overall percentage of all of U.S. income. In the 1970s, the top 1% of Americans earned just over 10% of all income. Today, they take home more than 20%. And obviously the distribution affects the bottom half: in the 1970s, the bottom 50% captured over 20% of national income; today they earn barely 12%. And wages are staying static for the bottom 50%.

The tax system is also hurting the bottom earners. In 2014, the bottom 50% had an average post-tax income of $25,000 per person. In 1980? That figure was $20,000 per person (adjusted for inflation). Meanwhile, the top 1% has gone from making $344,000 a person, on average, in 1980 to $1,000,000 a person on average in 2014. In other terms, in 1980, the top earners averaged 27 times more than the bottom earners. In 2014, they averaged 81 times more. It’s kind of gross.

As Chris Rock said, “If poor people knew how rich rich people are, there would be riots in the street.” I think this is probably true – everyone believes that they are more well-off than they are. Their “real” position isn’t often contemplated. Instead, everyone believes that they are “middle class.” More facts, because this is so depressing fun.

The average American believes that the richest fifth of the country own 59% of the wealth and that the bottom 40% own 9%. This is wildly incorrect. In fact, the top 20% of American households own more than 84% of the wealth. The bottom 40%? Hold onto your hats. The bottom 40% combine for 0.3%. You know the Walton family? They’re the ones who own Walmart (and treat their employees horribly). The have more wealth than 42% of American families combined. And here’s the thing, EVERYONE wants a more equal distribution of the wealth than actually exists.

The richest members of society have successfully conned us all into thinking things are better than they are. The average American thinks that the CEO-to-worker pay-ratio is 30-1 (but ideally, that it would be 7-to-1). Actually, it’s 354-to-1. Fifty years ago it was 20-1. Pretty not great. I could go on with more of these inequality facts, but I sense I may begin to lose you, so I’ll stop there. The point is simply that the state of economic inequality is seriously awful but we typically tend to think it’s significantly less bad than it is.

Part of the punching down mentality is fueled by an erroneous belief that there’s still a great deal of upward mobility. We blame those with less for laziness because we think that they actually could move up, en masse, if they just worked a little harder. We’re dead wrong. Those born at the top and bottom of the income ladder are likely to stay there. The rich stay very, very rich and the poor stay very, very poor. The Pew Research Center found that while most of us believe that the wealthy are unfairly favored by the economy, 60% of us believe that most people can make it if they’re willing to work hard. We’re wrong.

The United States is the most unequal of all Western nations and it’s not because we somehow have all the lazy people. We have significantly less social mobility than either Canada or Europe. For example, 42% of American men who were raised in the bottom fifth of incomes stay there in adulthood. In Denmark, that figure is 25% and in Britain (which is famous for its class constraints), that figure is 30%. In the United States, 8% of men born in the bottom rose to the top 5th. In Britain, that number is 12% and in Denmark it’s 14%. We’re not doing very well at living out the American Dream, despite still really enjoying talking it up.

We’re so busy believing that success is due purely to individual talent and effort that we’re ignoring important determinants like family inheritance, social connections, and structural discrimination. And the more we ignore these really important factors, the more we enable the discrepancies to increase and the gulf between the haves and have-nots to widen. George Carlin (miss him) joked “the reason they call it the American Dream is because you have to be asleep to believe it.” He wasn’t wrong.

So poor people are usually stuck in place based on factors out of their control, in place from their births. They’re also not lazy, as many conservative thinkers would have us believe. (Looking at you, Representative Chaffetz and your tasteless iPhone crack.) The narrative generally goes something like this: if you just worked harder, stayed in school, didn’t slack off, stopped having babies you can’t afford, went to college, spent and saved money wisely, you wouldn’t be poor. And also, stop being a leech. (Just recently, a representative quoted the bible as a reason why we shouldn’t help poor people. What a nasty human.) This is so unbelievably wrong and reveals a shocking ignorance about the realities of poverty.

Research has demonstrated again and again that such myths about poverty are lies. Wages are too low, there aren’t enough jobs, our education system is in the toilet, our criminal justice system is racialized and our labor market is discriminatory. The list goes on. It’s also WILDLY expensive to be poor. There are things that many of us don’t even think about because we have enough money not to notice. For example: banking is expensive. Most banks require a minimum balance in an account or they start charging you monthly fees. This means that many poor people have to do without banks, but this is costly too. Cashing a paycheck at a credit union typically costs 2-5% of the check’s value. Research shows that these types of fees can accumulate to over $40,000 over the career of a full-time worker. $40,000. Poor people are also likely to use pre-paid debit cards (because they can’t use bank cards and don’t have the credit for a credit card), which also come with fees.

Then, there’s the fact that many states issue pre-paid cards to dispense welfare payments. But this is a problem for anyone who lives far from a bank because they either lose out to ATM withdrawal charges or from having to travel to make a withdrawal (because gas and public transportation aren’t free and these people also can’t really afford to take time off work). Checking your card’s balance also often comes with a fee.

I mentioned credit above. It’s really expensive for poor people to access credit. They typically have to rely on high-cost payday lenders. In 2013, for example, the median loan was about $350. It lasted two weeks and cost $15 per $100. That’s an interest rate of 322% compared to the average credit card’s rate of 15%. This is obscene. It’s impossible to look at these numbers and not realize that our system is taking advantage of poor people to a disgusting degree.

Sadly, the Pew Research Center found that most wealthy Americans believe that “poor people today have it easy because they can get government benefits without doing anything in return.” As already mentioned, poor people can’t move out of their income bracket. In 2015, the poorest fifth of Americans paid an average of 10.9% of their income in state and local taxes. Compare this to the top 1%, which averaged about 5.4% of their income. (So please don’t tell me that rich people are suffering when it comes to paying taxes. I don’t want to hear it. It’s wrong. And greedy.)

Education is expensive and even the poor people who manage to attend college are faced with costly loans that their wealthier peers do not contend with. Students who receive Pell Grants had an average debt of $31,200 per borrower in 2012. That figure was $26,450 per borrower who never received a Pell Grant.

Transportation is expensive – low and moderate income households spend around 42% of their annual income on transportation. Middle-income households spend around 22% of their annual income on transportation.

Then there’s the simple fact that poor people pay more for just about everything. Here’s why. It’s cheaper per unit to buy in bulk. For example, the cost per roll of toilet paper in a 12-pack is way lower than the cost of a single roll of toilet paper. But here’s the catch, that 12-pack of toilet paper costs a lot more than a single roll. So poor people are forced to buy single rolls of toilet paper, multiple times, because they simply cannot afford the lump sum required to buy a multi-pack. On average, poor people are paying about 5.9% more per sheet of toilet paper (on off-brand toilet paper). Shoppers have to pay more up front to reap the rewards of savings. Poor people can’t because they can’t afford to just wait around until the next sale comes around. It’s a vicious cycle. (And this doesn’t even address the fact that poor people may not have access to larger grocery stores with wider varieties of items and sales or access to a car, which they would need in order to transport 30 rolls of toilet paper, or even the closet space at home needed to store the toilet paper.)

The list goes on and on and on, you guys. This country is terrible to its poor. And it’s up to us to face the unpleasant truth that there’s more to success than hard work and perseverance. When the top 20% owns 84% of the overall wealth of the country, there’s a problem. And we’re misdirecting our discomfort and rage when we deride those who are looking for a fair wage or who are barely making ends meet with their welfare checks. Frankly, it’s stupid to get wound-up about the poor person who is “gaming the system” with their food stamps when you have CEOs sending money to offshore accounts in order to avoid paying taxes or when you have the government giving obscene tax breaks to corporations (our taxes are covering their breaks, people. We’re subsidizing those corporate interests).

Anyway, this was all just very a long-winded way to encourage you to stop punching down and start punching up. Stop faulting the little guy who has nothing and start turning your ire onto the CEO who is making 354 times what his employees make. That’s the real problem. Yeah, it’s scary to think that you could also be poor with a single misstep, but chances are, you’re already probably in the majority of the country that’s getting economically screwed. It’s time to team-up, not divide-up, and that starts with facing reality.


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