The U.S. economy is booming - for billionaires

By HOLLY SKLAR
MCCLATCHY-TRIBUNE NEWS SERVICE
10/8/2006


Millionaires are so last millennium. The new Forbes 400 list of richest Americans is billionaires only.

If your net worth is a mere $999 million, forget it. A billion means a thousand million, and that's the Forbes 400 minimum - up from $900 million in 2005.

Donald Trump and two of his kids grace the Forbes 400 cover, but they ranked No. 94 with $2.9 billion, Trump's a long way from No. 1 Bill Gates with $53 billion.

The combined wealth of the 400 richest Americans is a record-breaking $1.25 trillion. That's about the same amount of wealth held by half the U.S. population, numbering 57 million households.

The economy is booming for billionaires. It's a bust for many other Americans.

A record 400 Americans are billionaires - and a record 47 million Americans have no health insurance. America has 400 billionaires - and 37 million people below the official poverty line.

The official poverty line for one person was just $9,973 in 2005 (latest data). That wouldn't cover the custom-made men's shoes ($4,128) and Hermes purse ($6,250) on the Forbes Cost of Living Extremely Well Index. The official poverty line of $15,577 for a three-person family is lower than the cost of the Patek Philippe men's gold watch ($17,600).

The Forbes 400 minimum is up $100 million since 2005, but the federal minimum wage has been stuck at $5.15 an hour - just $10,712 a year - since 1997. GOP leaders in Congress have been holding a raise for minimum wage workers hostage to more giant tax cuts for wealthy inheritors.

Wealth isn't trickling down. It's flooding up - from workers to bosses, small investors to big, poorer to richer.

The heirs to Wal-Mart founders Sam and Bud Walton have a combined $82.5 billion - while the children of Wal-Mart workers swell the ranks of state health insurance programs for the needy.

In today's corporate America, workers see gutted paychecks and pensions despite rising worker productivity, while CEOs get golden pay, perks, pensions and parachutes. The pay gap between average workers and CEOs has grown nine times wider since the 1970s.

The number of billionaires is a record high, but the share of national income going to wages and salaries is at a record low.

U.S. corporate profits increased 21 percent in the past year, Market Watch reported in March. "Profits have been so high because almost all of the benefits from productivity improvements are flowing to the owners of capital rather than to the workers," said Market Watch.

The wealthiest 1 percent of Americans (minimum net worth $6 million) owned 62 percent of the nation's business assets, 51 percent of stocks and 70 percent of bonds as of 2004, according to the latest data from the Federal Reserve Survey of Consumer Finances - which excludes the Forbes 400. That's way up from 1989, when the wealthiest 1 percent owned 54 percent of business assets, 41 percent of stocks and 52 percent of bonds.

Our growing economy is not producing a growing middle class, but a richer aristocracy.

The high point for median household income - the income of the household in the middle - was $47,671 in 1999, adjusted for inflation. In 2005, median household income was $1,345 less at $46,326. In the same period, the Forbes 400 gained more than 100 billionaires.

Government policies are fueling rising inequality. Taxpayers with incomes above $1 million will see their after-tax income grow by about 6 percent this year thanks to tax cuts the nation can't afford.

In an economy where money is flowing up to the very top, even college-educated workers are going backward. Inflation-adjusted median household income was lower in 2005 than 1999 even when the householder had a bachelor's degree, master's degree, professional degree or doctorate.

The problem is much bigger than the rich getting richer, while the poor get poorer. The really rich are getting richer at the expense of most everyone else.

Solutions include restoring the link between rising worker productivity and pay, raising the miserly minimum wage, narrowing the obscene pay gap between workers and CEOs, rolling back tax cuts for the wealthy - and stop taxing income from work more than income from capital gains.


Holly Sklar is co-author of "A Just Minimum Wage: Good for Workers, Business and Our Future" www.letjusticeroll.org