Self Employed or Bust

The American Wealth Gap

July 25, 2008 – 9:42 pm

Part of the initiative behind firing my boss, becoming self employed and eventually building a business that continues to generate income whether I show up or not was addressed in my very first self-titled post, Self Employed or Bust. It centers around the disparity between an employee’s earnings and the earnings that business owners and shareholders enjoy.

The gap between the wealthy and poor has always been astronomically large. That has me wondering why I didn’t feel the same urgency in taking control of my destiny sooner. Perhaps it is because things are getting progressively worse. Take a look at the chart below from Professor G. William Domhoff’s article, Who Rules America to see what I mean.

 

What this chart reveals is a continuing, dramatic increase in profits for CEOs and corporations while production worker’s pay remains relatively flat. Minimum wage earners have actually seen a 9.3% reduction in the value of their earnings (after accounting for inflation and cost of living) in the same 15 year time period. That there is a difference is clear. What is now grossly evident to me is that the gap has become totally unreasonable.

If you want to become incensed, be shocked or (hopefully) find yourself equally motivated to grab a bigger slice of the pie, I suggest giving Professor Domhoff’s article a thorough read through. He had me completely engaged with this line, “…which means that just 20% of the people owned a remarkable 84% [of all privately held wealth], leaving only 16% of the wealth for the bottom 80% (wage and salary workers).” He follows that with a chart which clarifies things further.

	Total Net Worth
	Top 1 percent	Next 19 percent	Bottom 80 percent
1983	33.8%	47.5%	18.7%
1989	37.4%	46.2%	16.4%
1992	37.2%	46.6%	16.3%
1995	38.5%	45.4%	16.1%
1998	38.1%	45.3%	16.6%
2001	33.4%	51.0%	15.5%

 

 

That may have you screaming about the unfairness of it all, but I want to remind you of one thing… if you are an American citizen, you have the same opportunities those 20% had. What are you doing to get yourself moving into their world? What has kept you out of it? Is it reasonable to believe there is some invisible or all encompassing being, “the Man,” with nothing better to do with his time than to actively seek to keep you out of the club? Or is it more reasonable to believe that the only thing between you and them is the way you think about money, business and investing? I’d wager it’s the latter and I’ll elaborate further on that in my next post.

 

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