US rich-poor gulf `worse than in Britain'
Tuesday 18 April 1995
The latest figures released by the Federal Reserve show that the wealthiest one per cent of American households - each worth at least $2.3m (£1.4m) - own nearly 40 per cent of the country's wealth. The richest 20 per cent of Americans - households worth $180,000 or more - own 80 per cent of the wealth.
By comparison, the richest one per cent in Britain own 18 per cent of the nation's wealth, down from 59 per cent in the Twenties, according to research by Edward Wolff, an economics professor at New York University. The richest 25 per cent own 71 per cent of the wealth. Mr Wolff's studies show that the US is growing more unequal faster than Britain and the other major industrialised nations.
Other research has shown that American chief executives in manufacturing industries are paid 25 times more than the average shop-floor worker - in Japan chief executives are paid 10 times more. On the bottom end of the scale, the child poverty rate in America is four times the European average.
Mr Wolff explained that the wealth disparities between America and the rest of the industrialised world should principally be understood in terms of the lower welfare benefits for the poor in the US and, under Ronald Reagan during the 1980s, the dramatic reduction in taxes for the better off.
"There are other factors too, like the higher levels of unionisation in Western Europe and the stagnation of the housing market in the United States during the Eighties, a period when property prices in Britain, for example, rose substantially.''
Mr Wolff said he believed that if the Republicans succeeded in passing the items on the ``Contract with America'', their manifesto for change, into law the trend towards an ever-widening gap between rich and poor in would be further consolidated.
"The Reagan years were basically a party for the rich," Mr Wolff said. "The Contract is turning it into a banquet.''
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