Sam Pizzigati considers new research on the U.S. mid-century home ownership boom in the context of today’s record levels of inequality.
By Sam Pizzigati
Amazing things can happen when societies realize they don’t need the awesomely affluent.
What sort of amazing things? Take what happened in the United States between 1940 and 1960, as economists William Collins and Gregory Niemesh do in a just-published research paper on America’s mid-century home ownership boom.
Over a mere 20-year span, the United States essentially birthed a “new middle class.” The share of U.S. households owning their own homes, Collins and Niemesh note, jumped an “unprecedented” 20 percentage points.
By 1960, most American families resided in housing they owned “for the first time since at least 1870” — for the first time, in effect, since before the Industrial Revolution.
This home ownership surge, the two economists posit, rested in large part on an equally unprecedented surge in worker earnings. Median annual incomes in the mid-20th century “nearly doubled” as Americans realized wage gains “both large on average and widely spread across workers.”
This “widespread and sustained increase in the level of income,” Collins and Niemesh detail, “allowed more people to afford and select into owner-occupied housing than in previous generations.”
Trade Union Movement
What brought about that “widespread and sustained” income increase? That question lies beyond the scope of the new Collins-Niemesh paper. But not much mystery surrounds the answer. The years of the mid-20th century saw a vast expansion of America’s trade union movement. The struggles of new unions — in major basic industries ranging from auto to steel — essentially forced the rich to begin sharing the wealth workers were creating.
This massive mid-century labor surge also changed the face of the American political landscape. Union-backed lawmakers put in place programs that helped average families on a wide variety of fronts, everything from making mortgages affordable to expanding access to higher education.
And those union-backed lawmakers helped pay for those new programs by raising taxes on America’s wealthiest. Between 1940 and 1960, the federal tax rate on income in the nation’s top tax bracket consistently hovered around 90 percent.
That worker-friendly world of the mid-20th century has, of course, long since disappeared. Over the past half-century, the U.S. has witnessed an enormous redistribution — upwards — of the nation’s income and wealth.
Back in 1982, in the early stages of that redistribution, Forbes began publishing an annual compilation of the nation’s 400 grandest private fortunes. The initial Forbes400 list included just 13 billionaires. Their combined wealth: $92 billion. Over the next four decades, Forbes notes, the combined net worth of America’s richest 400 would rise to “a staggering $4.5 trillion — making them nearly 50 times better off than their 1982 counterparts, far outpacing the consumer price index’s near tripling.”
Overall wealth in the United States, the Federal Reserve relates, now totals $140 trillion. The bottom half of Americans hold just $4 trillion of that.
‘Unprecedented Transfer of Wealth’
The United States, adds The New York Times in a new analysis, is approaching an unprecedented “intergenerational transfer of wealth” that “will largely reinforce” this current record inequality. Households worth over $5 million, the Boston-based Cerulli Associates financial research firm calculates, make up just 1.5 percent of total U.S. households. Between now and 2045, this tiny share of the nation’s households will account for 42.5 percent of expected wealth transfers.
Making that top-heavy transfer even worse: Under existing U.S. tax law, wealthy married couples can pass on to their heirs as much as $26 million without paying a penny in federal estate tax.
Meanwhile, observes a top research exec at the Vanguard Group, tens of millions of American workers aging into their 70s can’t afford to retire. “All but the most wealthy” among us, Vanguard’s Fiona Greig tells The New York Times reporter Talmon Joseph Smith, appear to be — to some degree — financially unprepared for retirement.
Smith’s conclusion? The headline over his economic preview published earlier this month tells it all: “The Greatest Wealth Transfer in History Is Here, With Familiar (Rich) Winners.”
But our upcoming transfer of generational wealth doesn’t have to play out that way. The vast 1940-to-1960 expansion of America’s middle class, we need to keep in mind, didn’t just happen. Advocates for greater equality made it happen. Back before the Great Depression, those advocates confronted a maldistribution of income and wealth just as severe as the maldistribution we confront today. They battled for greater equity, and their success in that battle held up for a generation.
The challenge we confront today? We need to do more than create a much more equitable distribution of income and wealth. We need to create a much more equitable distribution of income and wealth that can last.
Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.
This article is from Inequality.org.
The views expressed are solely those of the author and may or may not reflect those of Consortium News.
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as others have pointed out there was plenty of wealth to be able to let some trickle down so that vets could buy houses but big capital, mainly oil and auto money, introduced the automobilization of the nation and public rail transit was almost totally destroyed to make the world safe for the private profit private transit system which has been destroying atmosphere and lives ever since and up to the minute. the most wasteful way to get 50 people to a location is to have them pile into fifty private vehicles rather than one or two public ones. duh? that’s us!
the essential element that has always created prosperity in USA is imperialism–the theft of resources, the exploitation of labour in small weak nations colonized by USA
That picture of suburbia really takes me back to Penny Lane. Those suburban castles were built not so much by labor unions but by men and women who had returned from fighting wars and had gained an awareness of what truly matters. Life, liberty and the pursuit of happiness. They were mocked by lefty folk singers that those houses were ‘all made of ticky-tacky and they all look the same.’ It was a happy time. Then came the Vietnam war and the ‘great society.’ The U.S. became the world’s busy-body in foreign policy and at home expanded the Federal Government profusely in the name of charity. Vast sums were committed to foreign wars and at home on education and anti-poverty programs. The enormous government became permanent as did the social problems which likewise expanded. Fast forward to today where people pitch tents in most large cities to party all day while lefty folk singers line up to feed them 3 gourmet meals per day. The fortune we have spent on foreign wars has done little to make it a better place. Likewise the vast sums spent by the ‘great society’ have largely made matters worse. The rugged self sufficiency of those veterans of foreign wars is still possible in the U.S. today. It is the Federal Government that is never the solution and has dumbed down the population to where the takers now outnumber the producers. The most unsustainable feature of a country that was once a middle class paradise.
The problem is bigger now than it has ever been in the past. There are so many multi-billionaires now that they have unlimited resources to rig the system and bribe whomever they need to bribe to get what they want. They also fully own the media, and that makes getting any message out to the public nearly impossible. There is also no mechanism whereby the vastly accumulated fortunes could be reclaimed from the wealthy, meaning there is no way for the government or any other entity to reduce the overwhelming control that the wealthy exert on society. I am not sure there is much of anything that can be done without huge changes in taxation, which is not even on the table. If anything, they are talking about more tax cuts for the wealthy.
“Back in 1982, in the early stages of that redistribution, Forbes began publishing an annual compilation of the nation’s 400 grandest private fortunes. The initial Forbes400 list included just 13 billionaires. Their combined wealth: $92 billion. Over the next four decades, Forbes notes, the combined net worth of America’s richest 400 would rise to “a staggering $4.5 trillion — making them nearly 50 times better off than their 1982 counterparts, far outpacing the consumer price index’s near tripling.”
It is not true that there was redistribution of wealth since 1982 as shows the increase in the number of America’s richest people as their number jumped from 13 to 400 in four decades. That means that the advent of archeo liberalisme initiated by Reagan and Thatcher and the Chicago boys of Pinochet in Chili had as only credo, make the wealthy people more wealthy and the poor more poor. In fact, Milton Freedman credo, according to his thrickle down theory, has been proven to be wrong, because those who amassed fortunes have no any intention to share their money with the common people. Quite the contrary, the wealthy people insatiable tend to accumulate more according to capitalist logic of accumulation of capital. The falsity of the so called theory of redistribution in capitalist countries is obvious as it is striking to see the homeless on every street corner of major American and European cities
Well, as the US came later into the war known as WW 2, a bit of time delay would help. As the US was not in Europe, that helped, and as the manufacturing part of the US was able to switch more quickly as it had not been bombed into what items , machines and armaments were urgently needed.
And too, after the war, due to the fact that so many learned how to kill——I think that large corporations were quite aware of the power that the fighting public held.As so many were involved in the war, that large amount of Americans could not be ignored.
And as so many companies switched into making what the nation needed, and as so many were involved with making life a shared event for all Americans—- many people actually bonded together in realizing that every once in a while—– might can make things right.
Were their errors along the way? On yes. But as a nation that was less effected , America did begin to learn a bit of how when we all share in positives, a nation can grow stronger. And as much of the fighting was away from America, that too was a life saver. Well, for white people things improved, but not aways for those who came from harsher climes. IN WW 2, Americans did have a lot of pluck and luck—but everyone knows that never lasts forever. I sometimes look at MARS and see that once upon a time water did flow there. I wonder, is there a way governments can live in peace and helpfulness———or are we heading like MARS into a thoughtless and horrifying future? Is our future a sign of “Water , water everywhere, but not a drop to drink?”
More of Europe was destroyed as were many points around the world. In an odd kind of way, as a newer nation America did find things easier than those nations that were raised with a different class structure. I suppose that often government knows best—-only later did America find that to be an allusion as we came into later wars.
And so, here we find ourselves a a nation , (said to be the greatest, ) but many truly finding that TRUTH can be an illusion—-and HOPE an more rare state. Ironically, it seems that WE the PEOPLE have less value as the years go by.Maybe that survival level will make it easier to survive what seems to be a perilous future.
Because we allow campaign contributions, including $millions given via PACs, of course the wealthiest individuals and corporations are going to ensure that government regulations and laws provide enormous wealth transfer to them. Zuckerberg alone gave $400 million to Democrat candidates in 2020. Politicians are dependent upon these contributions, so they are never going to implement laws to reduce the wealth of these plutocrats.
In addition, the uber-wealthy globalists are attempting to vastly increase this wealth transfer to themselves using scams, like the unproven and untestable catastrophic anthropogenic global warming scam, to frighten the gullible public into submitting to their wealth transfer agenda. For example, $trillions are being spent on so-called “renewables”, which are just as damaging to the environment as fossil fuels due to the immense increase in mining of the materials required (like lithium ,which requires huge amounts of fresh water, cobalt, and rare earth minerals, requiring extremely toxic chemicals to extract. Since most of these materials come from 3rd world countries, forced child labor is used and there are few environmental protections. Furthermore, the manufacture of windmills requires the use of vast amounts of fossil fuels for making tons of concrete and smelting tons of steel and aluminum. Turbine blades cannot be recycled and are piling up in landfills. Millions of birds and bats are being killed by rotating blades.
Even the socialist filmmaker, Michael Moore, has admitted the “renewables” push is a scam to make wealthy investors even wealthier, transferring taxpayer funds to them:
“Billionaires, bankers and corporations profit from it. The cancerous form of capitalism that rules the world, now hiding under a cover of green.” hxxps://nationalpost.com/opinion/terry-glavin-the-killer-lines-in-planet-of-the-humans 2020, Michael Moore, producer
(Already ultra-wealthy investors are getting even richer from this scam.)
But this is just one of the scams being used to transfer wealth to the plutocrats, created via government mandates implemented by cronyistic deals between the wealthy and the politicians who make the laws. The only way to change this and provide more wealth equality is by eliminating all campaign contributions from individuals, corporations, unions, etc, giving the middle and lower classes an equal voice and influence in creating our nation’s laws. One person, one vote, all equal.
Just how stupid are we??? “Overall wealth in the United States, the Federal Reserve relates, now totals $140 trillion. The bottom half of Americans hold just $4 trillion of that.”
And we may have in fact elected Joe Biden president, largely based on the votes of that bottom half.
Hell, back during that window of the 40’s and 50’s I was earning more interest in my savings account on my cash birthday presents and returned pop bottle deposits as a kid than I’ve managed to squeeze out of all my resources during this last decade of my retirement. The opportunities at age 7 were notably better than today at age 76. Today you can earn nada on what you squirrel away for days of want or emergencies. Interest on a “savings account” (WTH is that, exclaim Millennials and Zoomers!) peaked at about 7 or 8 percent in the 1970’s. Now they talk about the plausibility of banks charging us negative interest to park our rainy day funds there and prohibiting us to possess cash money. I suppose they will seize it if their incessant intrusions into our privacy discover you to be a possessor of such heinous contraband. Ask Lord Biden, his rotted mind seems to have become more invigorated these days as he concocts new ways to strap down the former middle class. I’d like to punch that sucker back into the 20th century when the dollars we earned with our hard labor (be it physical or intellectual) are now worth a fraction of their value when we earned them because of the miracle of compound inflation. I admit to my brother and sister all the time that none of us could have risen to our impressive positions of education and professional accomplishment during our peaks if we had to start again today from an humble middle class background. All the opportunities we were given as vanguards of the boomer generation have simply been snatched away by a society run by greedy, grasping billionaires who seem to think that their rank in the Forbes 400 is far more important than survival by any lowly prol or pleb. What particularly disgusts me is how these fortunate few ingrates seem to find some amusement in the pain of actually very hard working, persistent and still competitive youngsters who are deliberately deprived of opportunities by the cruel application of identity politics deliberately intended to divide and rule us. Nothing will foment class hatreds like conspicuous favoritism and the jealousies it elicits. Makes me wonder when they will bring back gladiatorial combat in the Colosseum, not that professional sport isn’t already something of the sort. I hope this clarifies the raison d’etre of the war in Ukraine to y’all: the American oligarchs are merely trying to steal back all the Russian national resources they stole once already back in the ’90’s under Yeltsin. They hate Putin no end because he repatriated many of those resources, necessitating that the American parasites steal them right back again. (It may take a nuclear conflagration to do so. What Nato has been doing for the past decade is nothing less than an attempted gang rape of Russia.) Just ask a man like Bill Browder who would actually refute his American citizenship to realise a tax advantage. The “good guys” are not winning, at least not in America. Best of luck to them in Russia.
Before jumping to the conclusion that socialism is the answer people should realise that the super wealthy today rely on welfare for the rich. They get the largest proportion of their wealth from government intervention in the economy. A capitalist needs wealthy customers to make good profits. Wealth distribution is essential to sustaining capitalism.
There is a blind spot the size of a church door in this article. The state of the US Empire in the world is unseen. The article discusses a period post WWII when all the major industrial powers of the world at the time EXCEPT the US were left in ruins. Western Europe, the USSR, and Japan were trying to reconstruct while the US was on top of the heap, the manufacturing and financial center of the world with its armies occupying all the other major powers save for the USSR.
As the US colossus looked down at the rest the world devastated by the conflict, the late diplomat and historian George Kennan, considered perhaps the principal architect of postwar US foreign policy wrote in Volume I of Foreign Relations of the United States, published in 1948:
“Furthermore, we have about 50% of the world’s wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia.… Our real task in the coming period is to … maintain this position of disparity…. To do so, we will have to dispense with all sentimentality.…. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.”
And THAT is the key to US prosperity during that “Golden Age.” US labor was thrown some small portion of the benefits.
That age is past and will not return. US society will have to adapt to the new reality of a multipolar world and the battle for the eroding benefits will be much harder than the period of Ozzie and Harriet – and JFK.
I agree. After WWII, US industries were in full swing (except during the 1946 recession). There was literally no competition for American products worldwide. Add the new US Dollar reserve currency status to that and voila! More products were produced by privately held companies compared to the large corporations of today. Farms were family businesses. Americans were also in the habit of working hard and spending less. Those that invested in Blue chip stocks in the 1950’s ended up quite well off years later.
The ascension of Japanese industries in the 1970’s were a high trumpet heralding the end of that day (or era) in the sun.
Author Sam tends to endeavor to see economics through a far left lens. ‘inequality’.whatever pretty much says it all.
This is very interesting. I’m wondering if the same (or similar) can be said of other Western nations such as Australia, Britain, Canada etc. Seems to me that this boom also occurred here in Australia, but more during the 60’s and 70’s.
Also, I’m wondering if this financial boom in the US working class is linked to the surge of religious cults that mushroomed in the US during the 60’s and 70’s.
I think the first sentence may be missing a word or two?
In any case, it’s notable that you can complete an entire article on wealth inequality without mentioning race. You do realize that the vast majority of the benefit of expanded home ownership (and other benefits) in the mid-twentieth century went to white households, right? You can’t talk about class without talking about race and vice versa.
Yes: All but the most wealthy can afford retirement. If we think things are bad now, wait until the Congress Kleptocrats steal more of our SS and Medicare. The US has had a declining average life expectancy for years (beginning before the pandemic), and it will get worse. The world’s most expensive health extortion system will get even more expensive, (as health outcomes worsen).
The phony Kabuki theater that the D/R dictatorship are performing re the “Debt Ceiling” will give them another excuse to steal more from us and give more to the oligarchy. (like always)
They have shoveled TRILLIONS in bailouts, tax breaks and subsidies for the banksters and the rest of the Oligarchy, nuclear force “modernization”, ever-larger D0D budgets, 100s of billions for Ukro-Nazis, Apartheid Israel etc.
Let’s just “vote” for the amoral kleptocrat with a D or R after their name – that’s our only “choice”
What we need is socialism. It was not only trade unions that had a major effect on earnings and living standards. It was the huge boom that followed the Second World War. The industrial capability of nearly every country except the U.S. had been destroyed in the war. The U.S. was the only country to come out of the war with its industry and production unscathed. The recovering world needed everything and the U.S. produced it. Now the U.S. produces nothing, and the capitalist trade unions are nothing but the police for the corporatists and do not represent workers. Time is running out for the crumbling U.S. Empire and its captive subjects in western Europe, but it refuses to accept this fact and is willing to provoke nuclear war to prop up its useless billionaire class.
Well put Carolyn, cheers!
The GI bill was not a Trade Union
Also, an argument could be made the Trade Unions and unreasonable spending are what created the bust in the late 60s and 70s. I would love to see more of the study and less using it to preach.
The GI bill was not a Trade Union
Also, an argument could be made the Trade Unions unreasonable spending are what created the bust in the late 60s and 70s. I would love to see more of the study and less using it to preach.