“The $2.5 Trillion Annual Theft” — Blog For Iowa

That is an estimate of how much the annual theft is from America’s workers.

A study came out this week that astounded nearly everyone. While everyone knows that workers have been left behind in the economic race since the early 70s, there had never been a study to put a real number on it. The RAND corporation undertook that challenge. The numbers they came up with caught most everyone by surprise:

Rick Wartzman at fastcompany.com addresses that with his opening paragraphs on the findings:

“Just how far has the working class been left behind by the winner-take-all economy? A new analysis by the RAND Corporation examines what rising inequality has cost Americans in lost income—and the results are stunning.

A full-time worker whose taxable income is at the median—with half the population making more and half making less—now pulls in about $50,000 a year. Yet had the fruits of the nation’s economic output been shared over the past 45 years as broadly as they were from the end of World War II until the early 1970s, that worker would instead be making $92,000 to $102,000. (The exact figures vary slightly depending on how inflation is calculated.)”


Tally it all up, according to RAND, and the bottom 90% of American workers would be bringing home an additional $2.5 trillion in total annual income if economic gains were as equitably divided as they’d been in the past—leading Rolf to dub the phenomenon “the $2.5 trillion theft.”

“From the standpoint of people who have worked hard and played by the rules and yet are participating far less in economic growth than Americans did a generation ago,” he says, “whether you call it ‘reverse distribution’ or ‘theft,’ it demands to be called something.”

From a Time magazine article on the same study Nick Hanauer and David Rolf point out:

“As Price and Edwards explain, from 1947 through 1974, real incomes grew close to the rate of per capita economic growth across all income levels. That means that for three decades, those at the bottom and middle of the distribution saw their incomes grow at about the same rate as those at the top. This was the era in which America built the world’s largest and most prosperous middle class, an era in which inequality between income groups steadily shrank (even as shocking inequalities between the sexes and races largely remained). But around 1975, this extraordinary era of broadly shared prosperity came to an end. Since then, the wealthiest Americans, particularly those in the top 1 percent and 0.1 percent, have managed to capture an ever-larger share of our nation’s economic growth—in fact, almost all of it—their real incomes skyrocketing as the vast majority of Americans saw little if any gains.

What if American prosperity had continued to be broadly shared—how much more would a typical worker be earning today? Once the data are compiled, answering these questions is fairly straightforward. Price and Edwards look at real taxable income from 1975 to 2018. They then compare actual income distributions in 2018 to a counterfactual that assumes incomes had continued to keep pace with growth in per capita Gross Domestic Product (GDP)—a 118% increase over the 1975 income numbers. Whether measuring inflation using the more conservative Personal Consumption Expenditures Price Index (PCE) or the more commonly cited Consumer Price Index for all Urban Consumers (CPI-U-RS), the results are striking.”

So where is the money that you and I didn’t get? Somebody got it. Back to the fastcompany.com story Hanauer and Rolf give their assessment:



“The $2.5 Trillion Annual Theft” — Blog For Iowa


7 thoughts on ““The $2.5 Trillion Annual Theft” — Blog For Iowa

  1. I would have been interesting if they compared the deviation from “counterfactual” with the change in several other variables: labor productivity rates of unionization, industrial accidents, changes in the stock market just for starters to try to determine what caused the change after 1975. It is one thing to know the average annual amount, another to know what caused the theft. Warmest regards, Ed


  2. Interesting information BUT so what?
    Doesn’t take a chart to KNOW we all have been ripped.
    See any government action to shift any of this? Or corporate change?
    They are too busy making their annal income meet their own needs.

    So slaves …….. weep over the chart of despair. OR BURN IT DOWN!


  3. For me, Tube, the main interest of the study was its source. I mean the Rand Corporation????!!!!. The Rand corporation is run by once and future CIA operatives and Air Force paranoics. Why are they so interested in poverty all of a sudden?


  4. Pingback: It is time to think outside of the box. – democratizemoney

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