The super rich, the 1 percent that owns the lion’s share of the
nation’s wealth, go uncounted in most income distribution reports. Even
those who purport to study the question regularly overlook the very
wealthiest among us. For instance, the Center on Budget and Policy
Priorities, relying on the latest U.S. Census Bureau data, released a
report in December 1997 showing that in the last two decades "incomes of
the richest fifth increased by 30 percent or nearly $27,000 after
adjusting for inflation." The average income of the top 20 percent was
$117,500, or 13 times larger than the $9,250 average income of the
poorest 20 percent.
But where are the super rich? An average of $117,500 is an
upper-middle income, not at all representative of a rich cohort, let
alone a super rich one. All such reports about income distribution are
based on U.S. Census Bureau surveys that regularly leave Big Money out
of the picture. A few phone calls to the Census Bureau in Washington, DC
revealed that for years the bureau never interviewed anyone who had an
income higher than $300,000. Or if interviewed, they were never recorded
as above the "reportable upper limit" of $300,000, the top figure
allowed by the bureau’s computer program. In 1994, the bureau lifted the
upper limit to $1 million. This still excludes the richest one percent,
the hundreds of billionaires and thousands of multimillionaires who make
many times more than $1 million a year. The super rich have been
computerized out of the picture.
When asked why this procedure was used, an official said that the
Census Bureau’s computers could not handle higher amounts. A most
improbable excuse, since once the bureau decided to raise the upper
limit from $300,000 to $1 million it did so without any difficulty, and
it could do so again. Another reason the official gave was
"confidentiality." Given place coordinates, someone with a very high
income might be identified. Furthermore, he said, high-income
respondents usually understate their investment returns by about 40 to
50 percent. Finally, the official argued that since the super rich are
so few, they are not likely to show up in a national sample.
But by designating the (decapitated) top 20 percent of the entire
nation as the "richest" quintile, the Census Bureau is including
millions of people who make as little as $70,000. If you make over
$100,000, you are in the top 4 percent. Now $100,000 is a tidy sum
indeed, but it’s not super rich—as in Mellon, Morgan, or Murdock. The
difference between Michael Eisner, the Disney CEO who pocketed over $300
million in one year, and the individual who makes $9,250 is not 13 to
1—the reported spread between highest and lowest quintiles—but over
32,000 to 1.
Speaking of CEOs, much attention has been given to the top corporate
managers who rake in tens of millions of dollars annually in salaries
and perks. But little is said about the tens of billions that these same
corporations distribute to the affluent investor class each year, again
that invisible 1 percent of the population. Media publicity that focuses
exclusively on a handful of greedy top executives conveniently avoids
any exposure of the super rich as a class. In fact, reining in the CEOs
who cut into the corporate take would well serve the big shareholder’s
Two studies that do their best to muddy our understanding of wealth,
conducted respectively by the Rand Corporation and the Brookings
Institution and widely reported in the major media, found that
individuals typically become rich not from inheritance but by
maintaining their health and working hard. Most of their savings comes
from their earnings and has nothing to do with inherited family wealth,
the researchers would have us believe.
In typical social-science fashion, they prefigured their findings by
limiting the scope of their data. Both studies failed to note that
achieving a high income is in large part due to inherited advantages.
Those coming from upper-strata households have a far better opportunity
to maintain their health and develop their performance, attend superior
schools, and achieve the advanced professional training, contacts, and
influence needed to land the higher paying positions.
More importantly, both the Rand and Brookings studies fail to include
the super rich, those who sit on immense and largely inherited fortunes.
Instead, the investigators concentrate on upper-middle-class
professionals and managers, most of whom earn in the $100,000 to
$300,000 range—which indicates that the researchers have no idea how
rich the very rich really are.
When pressed on this point, they explain that there is a shortage of
data on the very rich. Being such a tiny percentage, "they’re an
extremely difficult part of the population to survey," pleads Rand
economist James P. Smith, offering the same excuse given by the Census
Bureau officials. That Smith finds the super rich difficult to survey
should not cause us to overlook the fact that their existence refutes
his findings about self-earned wealth. He seems to admit as much when he
says, "This [study] shouldn’t be taken as a statement that the
Rockefellers didn’t give to their kids and the Kennedys didn’t give to
their kids" (New York Times, July 7, 1995). Indeed, most of the
really big money is inherited—and by a portion of the population that is
so minuscule as to be judged statistically inaccessible.
The higher one goes up the income scale, the greater the rate of
capital accumulation. Economist Paul Krugman notes that not only have
the top 20 percent grown more affluent compared with everyone below, the
top 5 percent have grown richer compared with the next 15 percent. The
top one percent have become richer compared with the next 4 percent. And
the top 0.25 percent have grown richer than the next 0.75 percent. It
has been estimated that if children’s play blocks represented $1,000
each, over 98 percent of us would have incomes represented by piles of
blocks that went not more than a few yards off the ground, while the top
one percent would stack many times higher than the Eiffel Tower.
Marx’s prediction about the growing gap between rich and poor still
haunts the land—and the entire planet. The growing concentration of
wealth creates still more poverty. As some few get ever richer, more
people fall deeper into destitution, finding it increasingly difficult
to emerge from it. The same pattern holds throughout much of the world.
For years now, as the wealth of the few has been growing, the number of
poor has been increasing at a faster rate than the earth’s population. A
rising tide sinks many boats.
To grasp the true extent of wealth and income inequality in the
United States, we should stop treating the "top quintile"—the
upper-middle class—as the richest cohort in the country. But to do that,
we need to look beyond the Census Bureau’s cooked statistics. We need to
catch sight of that tiny, stratospheric apex that owns most of the
Michael Parenti’s most recent books are Blackshirts and Reds:
Rational Fascism and the Overthrow of Communism andAmerica Besieged,
both published by City Lights Books.