We've all seen the grim signs. At the personal level, more and more families are losing ground as they struggle to reach, or remain, in the middle class. At the national level, sluggish economic growth isn't producing good new jobs for our young people, or preserving good jobs for mid-career workers. The two--growing inequality and anemic growth--are intimately connected.
This issue of the Washington Monthly examines the effects of this long-brewing but only recently recognized crisis--and sets out some concrete solutions. Working with the Washington Center for Economic Growth, the magazine takes a comprehensive look at how slow growth and inequality are combining to threaten the current and future livelihoods of children, students, young workers, families, and retirees. Brief articles will take you through the life cycle of U.S. families, showing that at every stage--from early childhood through education and working years to retirement--the two goals of human development and economic growth work together. And in each article, we offer specific policy proposals that could well make life better for U.S. families now and create a more vibrant future for the economy as a whole.
But first, let's take an overall look at the problem.
More and better economic research now documents that high and growing economic inequality is affecting our nation's economic growth, and even its stability. Some of the newest research uses large microeconomic data sets to understand how the distribution of income affects the mechanisms that propel economic growth--mechanisms that Americans across generations must rely on as they try to start healthy families, raise children, get ahead in their careers, and retire in comfort. The economic story that is emerging doesn't look promising--high inequality seems to be associated with less economic growth and more instability.
Certainly, inequality is associated with less family economic security. Case in point: Differences in wealth became even starker than income differences over the past four decades, with the top 5 percent of wealth holders distancing themselves from the rest of society by orders of magnitude. Just before the Great Recession, the average member of the top 5 percent was worth $1.57 million, compared to an average net worth between $95,500 and $360,000 for each member of the middle class, and a paltry $6,700 for those in the bottom 25 percent.
In order to understand what is going on in our economy, we...