The $79 Trillion Heist

A Bit of Context

The US economy grew significantly in the years following WWII. In 1950, the US GDP was $2.3 trillion (stated in 2017 constant dollars). It grew to $22.5 trillion in 2023, marking a nearly tenfold increase over 73 years. Adjusting for the population increase from 148 million in 1945 to 338 million in 2022, per capita GDP rose from $15,997 per person in 1950 to $69,287 per person in 2022 (again, in constant dollars). Any way you look at it, the US economy demonstrated robust growth during this period.

The Heist

Between 1975 and 2023 $79 trillion (79,000,000,000,000 or 79,000 billions) was transferred from the bottom 90% of the US population to the top 10%. By far, most of it ended in the pockets of the top 1%.

Based on the surge in the number of US billionaires¹ since the pandemic, these results are not entirely surprising. The 2019 Forbes billionaires list counted 607 billionaires in the US. By April 2024, this number had grown by 34 percent to 813.  In dollar terms, US billionaires held $3.1 trillion in wealth in 2019. This figure ballooned by 117 percent to $6.7 trillion by the end of 2024. In contrast, the bottom 50% of Americans (172 million people) hold just $ 4.2 trillion in wealth.

In 2020, the Rand Corporation published a report by Carter C. Price and Kathryn A. Edwards. “Trends in Income From 1975 to 2018.”²The Rand Corporation is a well-established consulting company that chiefly works for the Pentagon and other US security departments. So, very much not a left-leaning Washington think tank.

In the report's summary, it was stated that between 1975 and 2018, a total of $47 trillion had been transferred from the bottom 90% of the US population to the top 10%. This was based on answering the following question:

What would incomes have looked like between 1975 and 2018 if the productivity³ sharing trends of the thirty years following WWII had continued?

The actual trend for the whole post-WWII period is demonstrated in this chart:

Further, they produced a chart that showed that a median-income (that's at the mid point in the population) worker in 1975 earned $42,000 (in 2018 constant inflation-adjusted dollars). This grew to $50,000 in 2018, an increase of 16%.

BUT, if the income trends of the thirty-period year following WWII had continued, the median income for that worker would have been $92,000, an 84% increase.

In contrast, the income for the top 1% grew by 321%  to $1,384,000 between 1975 and 2018. NOTE: if the income trends of the 30 years following WWII had continued, that top 1% income would have been $630,000, 54% less!

In early 2025, Price updated this report with the note that the total transferred from the bottom 90% to the top 10% (really, most of it ended up in the pockets of the top 1%) was now $79 trillion!

It's always good to have alternative views of a phenomenon.

Here is another illustration of the heist, as depicted by the conservative economics think tank American Compass, which has developed a Cost of Thriving Index (COTI) to examine the effect of wage stagnation on middle-class incomes over the past 40 years. Instead of using inflation-adjusted dollars as the metric, COTI uses a market basket of products and services. How many weeks of work are required to purchase a given market basket?

"The Index measures the number of weeks a typical worker would need to work in a given year to earn enough income to cover the major costs for a family of four in the American middle class in that year: Food, Housing, Health Care, Transportation, and Higher Education.

In 1985, COTI was 39.7 weeks. Costs totaled $17,586, while the weekly income for a man aged 25 or older working full-time was $443 per week ($23,036 per year).

In 2022, COTI was 62.1 weeks. Costs totaled $75,732, while the weekly income for a man aged 25 or older working full-time was $1,219 per week ($63,388 per year.)"⁴

In 1985, a single male worker labored for 40 weeks to afford the essentials of middle-class life for a family of four. By 2022, that same worker needed to work 62 weeks (that is 55% longer) just to cover the same basics. However, there are still only 52 weeks in a year. Consequently, he found himself $12,344 short for the essentials over the course of a calendar year.

Political action by a coalition of the rich, corporations, and politicians from both the Republican and Democratic parties changed laws and regulations. These changes led to:

1. Monopolization of almost every sector of the economy – this is market concentration.
2. Globalization – the exporting of high-value jobs and giving finance a global reach.
3. Decline in unionization
4. Growth of the finance sector, especially its share of total corporate profits
5. Financialization of corporations – the shift in focus from the production of goods and services to the extraction of money.

Concentrated markets provide the dominant companies with opportunities to (1) set their own prices to customers, (2) suppress wages through a non-competitive labor market, (3) force prices down for products and services provided by their suppliers, and (4) eliminate or suppress competition and innovation by competitors.

For a bit more depth on what market concentration looks like in the US, see this post: Competitive Capitalism – long dead in the US(opens in a new tab)

Beginning in the 1990s and accelerating during the first decade of the 2000s, US companies relocated a significant portion of their production to Mexico, China, and other low-wage countries. A string of international trade agreements facilitated this.

To be clear, productivity improvements also contributed to the decline in the number of manufacturing jobs in the US (and around the developed world).

Between 1980 and 2020, employment in manufacturing and durable goods in the US declined from 33 million workers to 22 million, marking a 35% decrease. 70,000 manufacturing plants closed from 1998 to 2019. Meanwhile, jobs in low-wage sectors of the US economy, such as retail, education, healthcare, leisure, and hospitality, grew from 16 million to 46 million, representing a 180% increase. As Professor Temin points out, the US now has a two-tier job system: the top 10% of workers in the FTE sector (finance, technology, electronics) and everyone else working in the low-wage sector.¹

Beyond the manufacturing sector, the global financial sector exploded during this time.

In 1980, approximately 21% of U.S. workers belonged to a union. This gave them considerable bargaining power with owners over wages, benefits, and working conditions. Notably, this also established a baseline of wages and benefits that non-unionized companies had to match in order to compete. Today, fewer than 9% of the workforce is unionized, primarily comprising government employees.

This decline can be accounted for due to loss of the jobs in the highly unionized manufacturing sector and a sharp decline in enforcement actions by the National Labor Relations Board combined with an increase in active anti-union efforts by businesses.

The finance sector includes:

• Commercial (retail) banks
• Investment banks
• Non-bank institutions such as private equity funds, hedge funds, and private wealth management firms
• Insurance companies
• Government institutions (e.g., Federal Reserve and Treasury)
• Institutional funds, such as retirement funds (large pension systems like California’s) and non-profit endowments (think Harvard, Yale, Stanford, Ford Foundation, etc.),
• Exchanges and markets for stocks, bonds, foreign currency, derivatives, etc.

This sector has grown from about 4% of the economy in 1960 to over 8% today. More significantly, the finance sector takes in almost 25% of all corporate profits in the economy. Although this sector does provide services to the productive "real" economy, much of its activities are speculative, gambling, in fact.

After we investigate the intensification of insecurities, we will return for a more in-depth look at the finance sector and financialization. This will include new views of how money and banking actually work.

If you are wondering why you have not heard mention of standard economics, orthodox economics, in these explanations of how the economy works, wait until you come to Addendum 1 – Why Orthodox Economics Is Not Useful or click here >>>> to jump there now.