(Photo: Jeroen Elfferich / Flickr)Until Americans’ awareness catches up to the realities of the increasing US class divide, shrinking life opportunities for the majority and disappearance of social mobility, we will be unable to address the problems of high unemployment and economic stagnation.

It’s no secret that inequality today is at its highest level since 1929. Countless commentators lament record high inequality as a danger to our society and to American prosperity – a point that even establishment papers like The New York Times are now acknowledging. In an October 2012 story, for example, the paper warned that ” income inequality may take [a] toll on growth,” and reported that ” a growing body of economic research suggests that it might mean lower levels of economic growth and slower job creation in the years ahead.”

Political scientists are focusing attention on the dangers of growing economic inequality as a threat to political participation. As income and wealth inequality increase, Americans are forced to work longer and longer hours to make ends meet. This leaves less time to pay attention to the news and the world around us, and it means that the poor and working class are less likely to follow politics, and less inclined to participate in basic civic obligations like voting. As political scientist Frederick Solt points out, it’s no coincidence the United States has the highest levels of economic inequality in the first world, and the lowest level of political participation.1

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It’s not difficult to understand the concerns of those who study this issue closely. Income inequality is at its greatest level since The Great Depression, with the top one percent of Americans capturing an astounding 93 percent of all annual income gains in the post-2008 era. This represents a dramatic acceleration of an already extreme trend from the 1980s through the 2000s, when the top one percent captured one-sixth of all income created, and the top 10 percent captured approximately one half of created wealth.

More than 30 years of extreme inequality in earnings have produced similar extremes concerning the concentration of wealth. Recent statistics suggest the top one percent of Americans hold 34.5 percent of all wealth. The top 10 percent hold 74.5 percent of all wealth, and the top 20 percent (one in five Americans) hold about 85 percent.2

Estimates for the rest of America are quite sobering as well: In the wake of the 2008 financial crisis, the bottom 40 percent of Americans are estimated to have zero percent of all wealth, while the bottom half hold a miniscule 1.1 percent.3

The dire state of income and wealth inequality has to do with more than simply earnings; It is also related to hidden taxes and costs that exist all around us. The Bush tax cuts account for much of the growth in inequality, as they were disproportionately directed at the wealthiest Americans. Research from the Economic Policy Institute suggests that by 2010, 38 percent of the Bush tax cuts were going to the richest one percent of Americans, while 55 percent were directed toward the richest 10 percent. This amounted to a massive subsidy for the wealthy (the 10 percent who make more than $170,000 a year), and to a disproportionate shouldering of the tax burden (compared to previous tax rates) for those who were not so lucky to get these large cuts.

Other hidden taxes take a major toll on the working and middle class too. The cost of food is a common complaint in that US food costs were exacerbated by extreme heat and weather events that resulted in double-digit growth in the cost of corn in the United States in 2012, amid the worst drought in more than a half-century.

Other mounting costs also operate as a tax on Americans; for instance, the escalating cost of higher education and health care. As The New York Times reported in October 2012, “In the last school year, tuition, fees, room and board averaged $38,589 at private colleges, up almost $15,000 from a decade earlier, according to the College Board. At public four-year colleges, the total bill came to $17,131, up more than $8,000.”

Estimates of the cost of education vary by a wide margin, but all available figures suggest the cost has increased dramatically. Lower estimates suggest the cost of tuition at a four-year college or university, after controlling for inflation, increased by nearly 150 percent during the period from 1980 to 2011, while other estimates suggest a growth of tuition costs by more than 100 percent from 2000 to 2011 alone.(4) Similarly, available data suggests health care costs have grown radically, with one estimate suggesting a 700 percent increase in costs for private plans from 1969 to 2010.

The growth in cost of living and inequality is also a function of depressed wages. The United States lost roughly half of its manufacturing jobs between 1980 and 2010. These were high-paying jobs with strong union-based benefits that used to constitute the backbone of middle-class America. The assault on labor means that, while nearly one-third of Americans used to be a part of a labor union in 1945, that number fell to just over 10 percent by the late 2000s. As unions disappeared, so did the middle classe’s share of income earned. Data from the US Census Bureau suggests that from the late 1960s to the late 2000s, there was a nearly one-to-one correlation between the decline in the percent of unionized Americans, and the decline in the share of all income that goes to the American middle class. Predictably, the share of income captured by the top one percent went up correspondingly during this period, as corporations dismantled domestic unions and the wage and benefit protections that accompanied them.5

Sadly, Americans are working longer and longer hours in the era of growing inequality. Bureau of Labor Statistics data suggests that the number of hours worked by married couples increased by about 20 percent from the early 1970s through the 2000s, despite the finding that the median family income stagnated, and despite a significant increase in labor productivity and corporate profits.6 These trends suggest that Americans’ position has not stagnated; rather, most are in a much worse situation today because of growing health care, food and education costs, increased inequality, stagnating wages and increased work hours.

With the dramatic decline in the economic fortunes of most Americans, one would think that awareness of the growing class divide in the United States would be as pronounced as ever. Sadly, this is not the case. On one level, recognition of inequality and elite power is fairly high among Americans. For example, a December 2012 Pew Research Center poll found that 76 percent of Americans felt that “it’s really true that the rich get richer while the poor get poorer.” Similarly, a Pew survey from January 2012 revealed that 77 percent agreed “there is too much power in the hands of a few rich people and large corporations in the United States.”

Results from the General Social Survey found that concern for inequality is longstanding, with approximately two-thirds of Americans regularly agreeing that “differences in income in America are too large” across the decade of the 2000s.

And yet, despite these findings, evidence suggests that Americans – while they are concerned about wealth inequality – are not sufficiently aware of the fundamental divide that exists within the American economic class system. Americans are concerned with growing inequality and with excessive corporate power, but they aren’t aware of just how extreme the American wealth divide has become. This point was made clear in a 2011 Duke-Harvard study, which found that perceptions of inequality were far less extreme than actual inequality.

Surveying a nationally-representative sample of respondents, the study found that Americans thought that the wealthiest 20 percent retained 59 percent of all wealth, when in reality they held more like 84 percent (a 25 percentage point difference). Differences between perceptions and reality became even more extreme when comparing what Americans wanted the wealth distribution to look like, in contrast to what it looks like. Respondents said that the “ideal” wealth breakdown would allow the richest 20 percent just 32 percent of all wealth, compared to their actual 84 percent (an astounding 52 percentage point difference).

The above data suggest that Americans are not as aware of the chasm between haves and have-nots as they should be. If half of Americans share just 1.1 percent of all wealth, one would hope that most Americans would recognize this basic fact, as well as the reality that our country is increasingly divided between the haves (those who report some form of financial wealth) and the have-nots (those with zero financial wealth). Unfortunately, this is not the case for a strong majority of Americans. As of December 2011 (the last time the question was surveyed), the Pew Research Center found that nearly six in ten Americans (58 percent) rejected the idea that American society is ” divided into two groups, the haves and the have-nots.“

This finding seems all the more strange considering that just 46 percent of Americans categorized themselves as ” haves,” and nearly four in ten (38 percent) designated themselves as “have-nots” – strongly overlapping with the recent finding that 40 percent of Americans hold no financial wealth.

Much of the reason for rejecting the idea that America is divided between haves and have-nots comes from the public’s excessive optimism. The December 2011 Pew survey found that 58 percent of Americans agreed “most people who want to get ahead can make it if they’re willing to work hard.” A majority of Americans rejected the attempt to frame the US as divided between haves and have-nots in most every Pew survey done from the mid-1980s through 2011. This is likely due in part to the naïve assessment of 85 percent of Americans that they are part of the “middle class,” despite the fact that the bottom 40 percent of Americans earned just 10 percent of all income, and that they earned far less than the median national family income of approximately $50,000 a year (28 percent of households earned less than $25,000 a year, and the next 12 percent earned less than $35,000).7 The optimistic view that “everyone is middle class” is blatantly contradicted by the finding (post-2008) that the vast majority of new wealth created (93% of all annual income gains) goes to the wealthiest one percent, and that half of Americans have no financial wealth. The long-standing conviction that America is not divided along class lines, and that those willing to work hard will be rewarded, appears to be the relic of a bygone era. This delusion is held by Americans who cling to the promise of prosperity from a system that is increasingly leaving the masses behind.

Americans do recognize the problem of growing inequality, but their understanding of economics doesn’t seem to include comprehension of the economic class system under which we live. The failure to acknowledge the divide between haves and have-nots, and the refusal to even recognize that there are have-nots to begin with, speaks to a longstanding American individualistic culture in which the failures of the poor are rationalized as “deserved” due to their alleged lack of work ethic or commitment to personal sacrifice in the pursuit of eventual prosperity. Americans’ lack of class-consciousness, however, is an entirely predictable product of two major factors: socialization and material privilege. To put it simply, those who have been indoctrinated to ignore America’s class divide, and those who are on the winning side of that class divide (the materially privileged and affluent) are the most susceptible to propaganda that celebrates America as the land of “endless opportunity” for those willing to work hard enough.

National statistical data demonstrate that people are the product of the environment in which they live – whether one is talking about the powers of affluence or socialization. My analysis of national surveys from the Pew Research Center during the 2000s demonstrates this point clearly. First, the lack of critical class-consciousness is very much the product of socialization forces, as related to where one gets their information and how one grows up. Most specifically, denial that the US is divided between haves and have-nots is statistically a function of one’s partisanship, one’s ideology, one’s working vs. non-working-class background and media exposure. Analyzing Pew surveys, I find that class deniers are statistically more likely to be Republican, conservative, Fox News viewers, “born again” Evangelicals, and from non-union households. The connection between family background (growing up socialized with conservative and Republican values) and reactionary political and economic attitudes has long been known in the political science community, so the above findings should not be extremely surprising. One should not be surprised that those inculcated with Republican, conservative and Evangelical values (as children and adults) are more likely to embrace conservative and reactionary ways of looking at the world that deny the importance of class conflict and divide. Furthermore, being socialized within a union-household is also expected to produce individuals with a critical class consciousness and awareness of the material conflict between management and owners on the one hand, and union activists and members on the other. Finally, the connection between Fox News viewership and embrace of reactionary, pro-upper class capitalist values is hardly surprising.8

But socialization via indoctrination is not the only factor causing individuals to deny the existence of a class divide. Material affluence is important too. The Pew Research Center regularly surveys Americans on other parts of their personal background, which tend to be strongly correlated with denial of the class divide. My statistical analysis of Pew data suggests that a number of other demographic factors are significantly related to individuals denying that there are haves and have-nots. These demographic factors include: an individual’s sex, race, their education level, the financial and occupational well being of individual respondents, and the financial and occupational health of the community in which respondents live. These correlations suggest that the typical profile of someone who denies the class divide is a white, highly educated male, who lives in a well-off community in which plenty of jobs are available, who feels financially well-off, and who would personally classify his own economic status as a “have” rather than a “have-not.”9 Such relationships should not be surprising either. Those who have grown up in affluent communities, and who benefit from material affluence as adults stand on the winning side of the class divide. These individuals look at much of the public anger at the current economy and try to generalize their own positive experiences to those who are less fortunate and often denied the opportunities available to them. A predictable line of questioning and rationalization of the status quo I’ve heard so many times from privileged Americans goes something like this: “What are these people complaining about? I worked hard and have been financially successful. So that means anyone can do it, and these people are simply complainers who want something for nothing.”

Many will question why an individual’s lack of class-consciousness is an important issue for discussion. It’s critical because the class divides between the rich and everyone else is real and growing, and economic inequality is at a record high. Recognizing that we are a nation divided between haves and have-nots is essential if one is to adequately understand the economic problems we face today. The days of Horatio Alger stories with promises of rags to riches are over – if they ever existed to begin with – and we do our society no service by continuing to perpetuate them. Working harder today no longer means that one will be “better off” than one’s parents, or even that one will achieve upward mobility when it comes to financial wealth. At a time when 93 percent of all income gains are captured by the top one percent and people find themselves working longer hours for less, promises of hard work and sacrifice leading to prosperity seem naïve at best. This conclusion might seem depressing to many, but it’s a reality in an increasingly plutocratic modern economy.

The good news is that Americans appear to be near a critical tipping point when it comes to recognizing the importance of the class divide. While 58 percent of Americans denied that the US was divided between haves and have-nots at the end of 2011, that number was much closer to an even split just a few years earlier. In late 2007, Pew reported that 48 percent of Americans agreed that the US was divided between haves and have-nots, while 48 percent also rejected this characterization. The timing of the poll is important, because late 2007 represented the early stages of the long slide toward the bursting of the housing bubble (which was fully apparent by mid- to late-2008) and the eventual financial-economic collapse in late 2008. Many Americans are naively hoping against hope that the “good old days” that existed prior to the 2008 collapse are just around the corner, if only we are willing to make the necessary sacrifices to put ourselves on a path toward future prosperity. This assessment is unrealistic and should be stricken from American minds. We need to replace it with a more sober assessment recognizing the dire state of Main Street America. We need to move toward a more realistic understanding of the way in which our world works today. The world in which we live is characterized by rapidly shrinking life opportunities for the masses.

Until we recognize the gravity of the problems before us, we can’t effectively address concerns like growing corporate power and inequality, Wall Street corruption, and the corporate business elite’s war on the middle, working class and the poor. Material affluence will always play a major role in creating incentives for the privileged to deny the class divides in America. But those on the Left can do much to challenge the class denial narrative by refocusing our efforts on rejecting an informational culture that denies the existence of an economic class division between the haves and have-nots. There are many forces out there working toward indoctrinating Americans on the issue of class inequality, but that doesn’t mean we have to leave them unchallenged. The victory of Republican, conservative, Evangelical, and Fox News propaganda is far from assured in the era of high unemployment and economic stagnation in which most find themselves today. We can begin to develop a critical culture of class-consciousness by embracing the most basic of facts: We are fundamentally and increasingly a nation divided between haves and have-nots.

Notes

1.

Frederick Solt, ” Economic Inequality and Democratic Political Engagement,” American Journal of Political Science Vol. 52 (1), 2008, 48-60.; Frederick Solt, ” Does Economic Inequality Depress Participation? Testing the Schattschneider Hypothesis,” Political Behavior Vol. 32 (2) 2010, 285-301.

2.

Dan Froomkin, ” Half of American Households Hold 1 Percent of Wealth,” Huffington Post, July 19, 2012,; Steve Inskeep, ” Americans Underestimate US Wealth Inequality,” National Public Radio, October 7, 2010,

3.

Op Cit.

4.

National Center for Education Statistics, ” Tuition Costs of Colleges and Universities,” National Center for Education Statistics, 2013; Equal Justice Works, ” College Tuition Growth Rate is Biggest Bubble of them All,” US News and World Report, September 28, 2011.

5.

David Madland, Karla Walter, and Nick Bunker, ” Unions Make the Middle Class,” Center for American Progress, April 4, 2011; Zaid Jilani, ” How Income Inequality Skyrocketed and the 1 Percent Profited From the Decline of Unions,” Think Progress, October 21, 2011.

6.

For figures on corporate profit growth in recent decades, see: G. William Domhoff, ” Wealth, Income, and Power,” University of California at Santa Cruz, 2013.

Bureau of Labor Statistics, “Working in the 21st Century,” Bureau of Labor Statistics, 2013; My own analysis of data from the Bureau of Labor statistics suggests that, after controlling for inflation, real median family income in the US barely increased from 1980 to 2010, from about $45,000 a year in 1980, to about $47,000 in 2010, following the 2008 economic collapse. During this time, my research suggests that total labor productivity in the economy increased by nearly 75 percent.

7.

Data on the national household median income and income earnings for American families is available via the Census Bureau, at: US Census Bureau, ” Income, Poverty, and Health Insurance Coverage in the United States: 2011,” US Census Bureau, September 12, 2012; On the finding that 85 percent of Americans consider themselves as part of the upper, middle, or lower ” middle class,” see: Pew Research Center, ” People and the Press Values Survey,” April 2012.; For the finding that 40 percent of Americans have just 10 percent of all income, see: Jordan Weissmann, ” US Income Inequality: It’s Worse Today Than it Was in 1774,” The Atlantic, September 19, 2012.

8.

The relationships between denial of the class divide and each of the demographic variables discussed are statistically significant, and hold after controlling for all other variables discussed, as well as for individual income. Pew Research Center data on class denial and predictors of class denial is available at the Pew Research Center web site. The polls examined here were from the 2005 to 2010 period.

9.

This conclusion comes from my analysis of Pew Research Center data. Denial of class divide is shown to be statistically correlated with a number of respondents’ demographic variables, including sex, race, education.