While America’s underclass and middle-class have witnessed decline or stagnation in their wages there has also been a concurrent rise of an American overclass. As recently as 1967, only slightly more than one million families earned more than $100,000 a year (in 1993 dollars)…But by 1980, 2.7 million lucky households counted incomes of more than $100,000. And by 1993, this group had doubled again, to 5.6 million households, and nearly one million American households were enjoying incomes over $200,000. (David Frum, The International Herald Tribune (8/18/95) The US Census Bureau reported to Congress in October of 1995 that the highest income fifth of all households has 49.1 percent of all income…The figure has gone up in all but one of the last 20 yearsî (Editorial, The International Herald Tribune (10/10/95) The growing inequality in wealth has not just grown between the middle-class and the comparatively rich (overclass), but also among the very rich. It’s not just that the top 20 percent have grown richer compared with the rest. The top 5 percent have grown richer compared with the next 15 percent. The top one percent have grown richer compared with the next 4 percent, and it looks like the top .25 percent have gotten richer compared to the next .75 percent. (Paul Krugman, The International Herald Tribune, 8/8/95)

The trend of a growing inequality between the haves and the have nots is not unique to the United States. Where the US is today, the UK just might find itself tomorrow. The similarities between the two countries emerge from the data presented in the latest Oxford Review of Economic Policy by A.B. Atkinson of Oxford University: in the second half of the 1980’s the share in the US income of the poorest 20 percent was 5.7 percent; in the UK it was 7.5 percent, third from the bottom among European countries and far below Germany’s 9.8 percent. While income distribution in the United Kingdom was not decisively more unequal than in France and Italy, it grew more unequal in the 1980’s more quickly than even in the US.(Martin Wolf, The Financial Times, 4/20/96) Because of these two divergent trends, what we, and most industrialized countries of the world, are facing is the development of two societies. (Rifkin, p. 143)

Robert Reich argues that these economic changes are having an effect on the nature of families. He shares that as secretary of labor, I carry on a kind of free-floating focus group. Every week I am out there talking to people…And what I hear over and over again, is: It’s getting harder to pay the bills. The coping mechanisms that we have been using are beginning to run out. As the median male wage began to decline in the late 1970’s, American workers developed a number of coping mechanisms. The first one was for women to go into the workforce in great numbers…The second coping mechanism, which emerged in the 1980’s, was for people to have smaller families. Not because they loved children less but because they couldn’t afford larger families. And then that coping mechanism was exhausted. In the late 1980’s, the third coping mechanism was to work longer. We saw the workweek become longer, and we saw a lot of people take on second, even third jobs. I’ve met people who are working 80 hours a week, 90 hours a week…People tell me they’re worried. They’re worried about keeping their jobs. These are the kitchen-table conversations that Americans all across this land are having. Reich argues that yes there are jobs, but for too many they just don’t pay the bills. There are 11 million people in this country right now who are working for under $5.15 an hour, near the minimum wage. These are not kids. Forty percent are the sole breadwinners of their families, and they are making $8,600 a year, the sole breadwinner of their families. (Harper’sMagazine, (May 1996), p. 41) Lester Thurow has written that in America, 32 percent of all men 25 to 34 years of age earn less than the amount necessary to keep a family of four above the poverty line. (Thurow, p. 31)

It is useful to recall that before the Industrial Revolution, the three generation family had been the center of subsistence in almost every respect. Afterwards, it gradually lost this function and virtually vanished – a development accelerated by the greater mobility of the young and, recently, even of older people…Today, even the ‘classic’ two-generation family consisting of the parents and their one-to-three children is out. (Christian Lutz, Societies in Transition. p. 103) In the United States in 1990, 20 percent of children were living with their mother only. (Richard Morin, The Washington Post (6/2/96) p. C5) Remember, Americans do not have cousins, as Europeans and Japanese do. Here, people don’t even know their cousin’s phone number. There’s nobody to support them. Americans have already traded in their families for personal, individual advancement. (Luttwak, Harper’s Magazine (May 1996) p. 47)

Commentators on the issue of increasing wealth for some and stagnating and declining wages for many others argue that some form of worker backlash is an inevitable byproduct of an era that has squeezed labor, and yet rewarded shareholders beyond their wildest dreams. (Stephen Roach, The Financial Times) Robert Reich recently told a gathering at a California town meeting that if too many people feel excluded from the upside gains of a dynamic economy and disproportionately burdened by its downside risks and costs, they eventually will support policies that sacrifice growth in favor of economic security. (Steven Pearlstein and Clay Chandler, The Washington Post (4/22/96) p. A7)

Martin Wolf wrote in a recent editorial for The Financial Times that the most influential reasons, in practice, for concern about income distribution are not ethical, often though these are paraded, but political and social. Democracy gave the poor something valuable – the vote. If they are prepared to use it, vote-seeking politicians will respond. But the concern about distribution is also motivated by the desire for a more stable and pleasant society. In particular, several social problems – notably crime – seem to have been exacerbated by the growing inequality in male earnings in the deregulated labor markets of the US and, increasingly, UK…The costs for the US have been dire: fear of crime has become a social and political obsession; 2 percent of the US male workforce are in prison, the same proportion as those unemployed for more than a year in European countries…The costs of containment are also astronomical; in 1995, California spent more on prisons than on education. (The Financial Times, (4/20/96) p. 16)

Edward Luttwak shares Wolf’ssentiment when he argues that I’m concerned about the underclass. Not out of compassion but because they are a potential threat to me. For the same reason, I’m also concerned about the lower middle class, which is now economically insecure. I’ve watched them, in Poland and in Russia and in France, saying: That’s it, fellows. You guys come and preach to me and tell me that the market rules. Well, I’ll show you. I’ll put people into office who will screw you. (Harper’sMagazine, p. 47) Terry Burton, an unemployed and homeless man in the United Kingdom, warned a gathering in March of 1996 at the Church Action on Poverty Hearing that the gulf between the haves and the have nots is looming large as an enormous social problem…A less materialistic world is a certainty. Whether it is born of necessity via the ashes of destruction of our society and environment, or by peaceful, cooperative and considerate means is much less certain. (Terry Burton, National Poverty Hearing at Church House, (3/19/96)

In summary, nobody disputes that the past two decades have been cruel to unskilled workers in the industrial countries. Growing income inequality has given rise to millions of working poor in the United States, and this sorry condition is now becoming apparent in Western Europe. Between 1973 and 1993 the real hourly wage of Americans without a high school diploma fell from $11.85 an hour to $8.64 an hour. In the early 1970s households in the top 5 percent of the income bracket earned 10 times more than those in the bottom 5 percent; today they make almost 15 times more. Similar trends are evident in Britain and even the most equalitarian country, Sweden. (Ethan B. Kapstein, Foreign Affairs, (May/June 1996), p. 22) These economic trends are also having a dramatic impact on the institution of the family, and on how young people see the future.