Are rich people smarter than they were 30 years ago? Are they more talented or massively more productive? Do they add dramatically more value to society? What about the middle class? Are the middle class less intelligent today? Does the average person contribute substantially less value to society than they did just three decades ago?
In the last 30 years, the top 1 percent has gained $21 trillion in wealth. This may sound like a lot until it’s measured against the bottom 50 percent, who have lost $900 billion in wealth during the same period, which exposes the numbers as obscene. Today the top 1 percent owns more than 50 percent of the wealth of the country. The bottom 80 percent own only 7 percent of the pie. The rich are getting richer and everyone else is getting poorer, literally.
Today, the average CEO makes 360 times more than the average employee. This means that for every month of work performed by a middle-class employee, the CEO only has to work one hour. These lucky few are considered rich and make up the top 1 percent of the population in the United States. Qualifications for membership in this elite status require an average income of over $1.3 million annually and ownership of assets that are worth more than $10 million. The next 60 percent of Americans are considered middle class. These individuals share an average income of $57,000 with a total net worth of $97,000. The remaining population in America are considered poor, make an average of $25,000, and have less than $5000 in net worth.
Unfortunately, this is not only an American problem but one shared globally. Income inequality has spread like a virus around the globe. The recent disparity between the rich and the poor has never been greater in human history. According to the St. Louis Federal Reserve, the bottom 50 percent of the world’s population, amounting to 3.75 billion people, are worth a total of $1.3 trillion. The top 20 billionaires in the world, according to Forbes magazine, have a combined net worth of over $1.31 trillion. This means that 20 people in the world are worth more than the bottom half of the entire world combined. If these numbers don’t scare you, they should. Not because the accumulation of enormous wealth is a bad thing but because the gross disparity very simply represents an unstable math problem that history has taught us over and over again cannot be sustained.
America was built on a system of capitalism. A place where anyone, regardless of color or creed, could find success through hard work, resourcefulness, and ingenuity. For this reason, America has long been considered the land of opportunity. People from all over the world envied our system. The “American dream” identified the United States as the best place to live, and the whole world was aware of it. While that may still be true in some ways today, we are in rapid decline. Hope is the major ingredient of dreams. Unfortunately, there is less to be hopeful about than ever before.
Opportunities for young people are dramatically different today than they were for young baby boomers 50 years ago. The millennial generation is the first generation in American history that will not exceed the wealth of its parents. This is a reality that young people are acutely aware of. When asked their number-one strategy for achieving future wealth, the most popular answer among millennials is “inherit it.”
Student loan debt has kept the millennial generation from investing. They have put off buying homes. They have put off buying cars. They have put off getting married. All because they are too busy paying off their debts. Keep in mind that the costs for college tuition have more than doubled since the turn of the century. Keep in mind as well that more Americans today than at any time in history are going to college. A college degree is as necessary today as a high school diploma was a few generations ago. This means that not only do more millennials have more college degrees than any generation, they have also taken on 300 percent more debt than their grandparents, all before entering the workforce.
The weight of this debt is a problem for the future of investment and should scare the heck out of everyone with real money. Millennials have now all reached adulthood. The class of 2019 was the last graduating college class of their generation. This generation will be the main drivers of the economy over the next 30 years, and they are facing a mountain of debt.