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Record number of US millionaires
By Jamie Chapman
8 June 2005
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The number of millionaire households in the United States grew
in 2004 to a record 7.5 million, up 21 percent in one year, according
to surveys cited in the May 25 Wall Street Journal. This
very wealthy segment of the population now controls an astounding
$11 trillion in assets.
The study of millionaire growth was released by Spectrem Group,
a firm that specializes in wealth research. Spectrem managing
director Catherine McBreen explained to the Wall Street Journal,
Peoples attitudes toward the economy are so negative,
but the reality is that the affluent are bouncing back to where
they were before the bear market.
On the other end of the scale, however, working people in the
US are not bouncing back, but falling ever further
behind. Wages of hourly workers have failed to keep up with inflation
for the 11th month in a row. For April 2005, the US Bureau of
Labor Statistics reported a further 0.3 percent decline in real
wages of. Even with an increase in the average number of hours
worked, average weekly earnings stood at only $537.60 during April,
or less than $28,000 a year.
The persistent decline in workers real wages is emblematic
of the so-called economic recovery, now entering its 43rd month.
Meanwhile, job growth remains anemic. The economy generated
only 78,000 jobs in May, well below economists expectations.
The growth in employment marks a sharp reduction from the 274,000
April figure, which was briefly heralded as the start of a long-awaited
turnaround for jobs.
In its analysis of the May statistics, the Economic Policy
Institute documented the two-year fits and starts
pattern whereby a sizable number of jobs are created one month
only to be followed by a sharp decline the next. With Mays
numbers, the total number of jobs has only now reached the levels
of March 2001, when officially the recession began. The monthly
growth was the slowest in nearly two years.
Manufacturing jobs were down 7,000 in the month, bringing the
total loss over twelve months time to 48,000. Most of these
jobs are not expected to come back. Another ominous sign is that
temporary employment was flat last month. Optimistic analysts
had touted an earlier growth in temporary jobs as being a prelude
to a greater number of permanent jobs to follow.
The unemployment rate fell slightly to 5.1 percent in May.
Although the May report showed some increase in the labor force,
much of the reduction until now has been the product of fewer
workers bothering to seek employment. The economy has failed to
produce anywhere near enough jobs to keep up with the US population
The bleak job picture was further underscored by last weeks
increase in new unemployment claims to a total of 350,000. The
increase of 25,000 from the prior week was the highest one-week
rise since January 2004.
The lack of jobs is directly related to the increase in the
productivity of workers over the last several years. The Labor
Department announced Thursday that first quarter productivity
increased by 2.9 percent, an upward revision. Rather than a more
efficient workforce having the effect of raising all boatsas
it typically did in generating increased living standards through
the period of the post-war boomtodays more efficient
workers find it ever harder to find a job at all, let alone one
with decent pay and benefits.
Companies are still extremely reluctant to hire, in part because
their chiefs do not believe that this economic recovery will bring
long-lasting growth. Employers do not want to face a renewed downturn
with what they consider a bloated workforce.
The cost of health care, along with pension benefits, has been
a major contributing factor in the rise in unit labor costs, which
was up 3.3 percent in the first quarter. Nearly half the US workforce
does not receive employer-provided health insurance. These workers,
who slave away in the lowest paid jobs, are losing even more ground
The social polarization that produces misery for many workers
has also produced a sizable millionaire class. Another study cited
in the Wall Street Journal reports that the number of US
households with liquid assets of $20 million or more is increasing
by 3,000 households a year.
In contrast to wage earners whose income has been falling,
the wealth of the rich has grown based largely on their investments.
Households worth $3 million or more make 34 percent of their money
on investment gains, as opposed to only 31 percent on compensation.
The affluent are particularly prone to choose higher-risk but
lucrative investments such as hedge funds, private-equity funds,
and other schemes not available to average investors.
Most of the well heeled, whose fortunes sagged when the dot.com
bubble burst, have recaptured their lost wealth. The real estate
bubble, as well as stronger financial marketsthemselves
driven by the constant restructurings, job and benefits cuts,
and wage declineshave contributed significantly to the growth
of wealth in the last two years.
The rich continue to increase in both numbers and worth, in
spite of the widespread pessimism about the outlook for the economy
among wealthy investors. They hold a substantial 9 percent portion
of their assets in cash deposits.
One of the major contributors to the upper echelon of investors
restoring their bank accounts has been the series of tax cuts
enacted by the Bush administration since 2001, with the backing
of Congressional Democrats. Besides cuts in income taxes skewed
to the rich, taxes on dividends and investment gains have been
According to a New York Times analysis published on
June 5, over 15 percent of the Bush-era tax breaks will go to
the top one thousandth of total taxpayers. These 145,000 highest
earners have incomes that start at $1.6 million apiece, and go
to the sky from there.
The share of the national income allocated to this tiny elite
has more than doubled in the last three decades. It has reached
a level not seen since the 1920s. No doubt their share has
risen significantly since the year 2000, the latest that such
figures were available.
The Bush administrations proposal to extend the tax cuts
indefinitely, now winding its way through Congress, will further
shift the tax burden away from the rich and onto the working class.
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