A Big Pie, Sliced Thin

Who's winning in the new economy? Not as many people as you might think. Even as the market hits the stratosphere, the vast majority of working Americans continue to struggle along, at least in terms of wages.

In 1998, for example, the average annual income for all working males was $36,252, a gain of precisely $5 since 1970. At the same time, women's salaries went from $21,470 to $26,855.

The picture is much bleaker, though, if you look specifically at the three-quarters of Americans who have not graduated from college. Over the course of a single decade, according to the Department of Labor, the average male high-school graduate, the blue-collar worker of yore, has seen his inflation-adjusted weekly wages drop by an astounding 20 percent, from $679 to $559.

Of course, even these dismal averages are boosted by the presence of college dropouts like Larry Ellison and Bill Gates in the mix. A more accurate indication may be to look at how many families fall on one side or another of the poverty line, defined by the government as $13,290 per year for a family of three.

In 1970, 5.2 million households, roughly 10.1 percent of American families, were considered impoverished. In 1997, 7.3 million families, 10.3 percent of all households, lived in official poverty. And between 1980 and 1997, poverty as a proportion of a state's population grew fastest in the new economy's patron state, California, from 11 percent to nearly 17 percent.

Government-certified hardship is an arbitrary delineation. To be sure, there are millions of families well over the poverty line who are struggling to make ends meet. Are they reaping any of the benefits of the new economy? Not really.

The truth is, as rapidly as the American pie is expanding, the proportion devoured by the rich is expanding even faster, leaving the poor with the same or less than they used to have.

The average CEO's salary, for instance, rose 62.7 percent during the '90s. CEOs, on average, now make more than 107 times that of the typical worker. That's up from a multiple of 56 in 1989, according to the Economic Policy Institute.

This widening gap in paycheck parity helped the richest fifth of Americans achieve a pretax income boost of 23 percent between 1989 and 1998, an increase of tens of thousands of dollars for the average well-heeled home. By contrast, a recent study by the Center on Budget and Policy Priorities found that during the same period annual income for the poorest fifth grew by a whopping $23 dollars, to $9,223.

Even worse than the wage gap is the more cavernous wealth gap. Household wealth, of course, takes into account wages and other assets, such as investment income, as well as debt.

Because of increasing reliance on debt, the typical American household's net worth increased only slightly during the '90s, by about $2,200, to $61,000. Meanwhile, the wealthiest 1 percent of Americans control 38 percent of the nation's wealth, while the bottom 80 percent controls just 17 percent.