As 1998 began, Jack Nicholson starred in a popular movie called As Good as It Gets. From some perspectives, that phrase might have described the American economy at the same time. Unemployment, inflation, and mortgage rates were low. Despite jitters at the end of 1997, that year brought banner prosperity to most stock market portfolios. There were even projections from Washington to indicate that a flush economy would bring the annual federal budget into the black for the first time in thirty years and as much as three years ahead of the 2002 deadline negotiated between the White House and Congress.
Political scientist Andrew Hacker, however, does not share the view that everything is as rosy as this bright macroeconomic picture might suggest. He worries about the distribution of wealth in the United States. Specifically, he fears what will happen if the growing gap between the best-off Americans and the rest of the nation keeps growing, which Hacker believes is the most likely scenario in the foreseeable future.
Best known for Two Nations: Black and White, Separate, Hostile, Unequal, his 1992 study of race relations in late twentieth century America, Hacker follows up with a clear and penetrating exploration of a subject as fascinating as it is controversial: money, who has it, how much, and why. Noting that Americans are both intensely private and immensely curious about personal money matters, Hacker sets himself two tasks.
First, Money presents information to answer basic questions about American incomes. Those questions include: How much money do Americans make? What are their sources of income? How do individuals and groups compare with one another financially? How are Americans getting along in the economic world they inhabit? The United States, Hacker observes, is a world leader when it comes to gathering data on earnings. Thus, answers to many of his guiding questions are in the public domain, but Hacker focuses them succinctly by skillfully drawing on government reports from the U.S. Bureau of the Census, the Internal Revenue Service, the Social Security Administration, the Securities and Exchange Commission, and the Department of Labor. Publications from the private sector—Forbes and Financial World, to mention only two—also provide key material for Hacker’s analysis, which uses figures through the year 1995.
Second, Hacker probes deeper by asking why American money gets apportioned as it does. Answers to that question are not so easily obtained, for they involve interpretation that goes beyond the numbers and percentages found in government records or financial reports from the private sector. To respond to issues about why wealth is distributed as it is in the United States, Hacker has to explore American history, reflect on fundamental economic philosophy, and weigh choices that reflect and influence ethical values, public policies, and business practices. In addition, these lines of thought unavoidably lead Hacker to ask whether the nation’s allocation of wealth makes good sense. Hacker, at times explicitly but more often by implication, questions that it does. Money is so full of facts and figures that no synopsis can report them all, but here are a few examples that are vital for the analysis that separates Hacker’s book from run- of-the-mill accounts of the state of American wealth. With the figures adjusted to 1995 values, the amount of money held in American households rose from $2.7 trillion in 1975 to $4.5 trillion twenty years later. In constant dollars, average household income during that same period jumped from $37,365 to $44,938, a gain of 20.3 percent. This rising tide lifted all boats, but far from equally. Not only did the top fifth of the population do twenty-four times better than the bottom fifth, but also, in terms of the amount of the nation’s aggregate wealth that was theirs, 80 percent of the American population lost ground—the drop was from 56.7 percent to 51.3 percent.
Looking at the gains made between 1975 and 1995, Hacker emphasizes that far more households had two or more incomes in 1995 than they did two decades earlier. The dual earnings, however, helped the upper quintile much more than the fourth quintile, for example, where average household income grew only $862 between 1975 and 1995. Affecting that disparity was the fact that the number of high incomes rose at the top end of the scale, as did the number of low incomes in the bottom tiers. Meanwhile, although Americans reputedly enjoy a high-wage economy, the median 1995 wages and salaries for full-time workers in forty-two typical occupations charted by Hacker—they include pharmacists, engineers, computer analysts, and college faculty at the high end and hairdressers, waiters, and laundry workers at the low end—amounted to a hardly lavish $24,908. Within this occupation group, the midpoint pay for men and women was $27,976 and $21,112, respectively. Also central to Hacker’s...
(The entire section is 2032 words.)