Keeping the Rich Invisible: How Census Bureau Hides the Super-rich

— Michael Parenti

WHEN A MIDDLE-AGED acquaintance of mine bragged that he weighed the same today as he did in his youth, I reminded him that weight resembles wealth; it's not merely the aggregate accumulation that counts, it's the distribution. And wealth differs from weight in that it tends to accumulate at the top.

Karl Marx had it right: Wealth is becoming increasingly concentrated in the hands of the few, while poverty spreads ever more widely among those below.

Some opinion makers disagree strongly. They insist that ours is a prosperous middle-class society. And if we are to believe the daily press, our economy is performing well. But again, look at the distribution and ask: cui bono (for whose good)?

During the Reagan-Bush-Clinton era, the share of the national income going to those who work for a living shrank by over twelve percent. The share pocketed by those who live principally off their investments increased almost thirty-five percent.

The New York Times (June 6, 1996) reported that income disparity in 1995 “was wider than it has been since the end of World War II.” Over the last two decades the average income for the top quintile (fifth) jumped from $73,754 to $105,945 in constant (i.e. inflation-adjusted) dollars, while the bottom twenty percent moved only from $7202 to $7762.

But these figures greatly understate the problem. Put simply, the Times story is based on a Census Bureau study that fails to report the income of the very rich!

An average income for the top quintile of $105,945 hardly represents a rich, let alone superrich, cohort. What goes on here? What has happened to the really rich people?

The remarkable thing is that for years the Census Bureau never interviewed anyone who had an income higher than $300,000; or if interviewed, they were never recorded as above the $300,000 “reportable upper limit,” the top figure allowed by the bureau's computer program.

In 1994, the bureau lifted the upper limit to $1 million. This still leaves out the richest one percent, the hundreds of billionaires and thousands of multimillionaires who make many times more than $1 million a year—and who own most of the nation's wealth.

By designating the (decapitated) top twenty percent of the entire nation as the “richest,” the Census Bureau is including literally millions of professionals and others who make as little as $70,000 or so, people who are anything but the “richest,” while excluding the really big money.

The superrich are concentrated in a portion of the population so minuscule as to be judged statistically insignificant. Despite their tiny numbers, they own the lion's share of everything there is to own and enjoy an income advantage a thousand times greater than the spread allowed by the bureau's figures.

The difference between a multibillionaire who takes in $10 million in any one year and a janitor who makes $8000 is not fourteen to one—the usually reported spread between highest and lowest quintiles—but over 14,000 to one.

When asked why this sampling procedure was used, a bureau official told my research assistant that the bureau's computers could not handle higher accounts —a most improbable excuse, since once the Census Bureau decided to raise the upper limit it did so without any difficulty, and 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 understate their income. The earnings they report are only about fifty to sixty percent of actual investment returns. And since their actual numbers are so few, they are not likely to show up in a national sample. In short, studies of this sort give us no idea of how rich the very rich really are.

Of late much media attention has been given to the CEOs 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 their affluent shareholders each year.

Publicity that focuses exclusively on a handful of greedy top managers conveniently avoids any exposure of the superrich as a class. In fact, reining in the CEOs who cut into the take would well serve the big shareholders' interests.

Marx's prediction about the growing gap between rich and poor still haunts the land—and the entire planet. The number of persons living below the poverty level in the United States climbed from 24 million in 1977 to over 35 million by 1995.

The concentration of wealth creates more poverty. As some few get richer, more people are falling more deeply into poverty than in earlier times and finding it increasingly difficult to emerge from it.

The same pattern holds throughout most of the world. For years now, as wealth concentrates globally, the number of poor has been increasing at a faster rate than the earth's population.

Rather than declaring Marx outdated—a pronouncement that has been bouncing around the free-market world for over a hundred years—we should note that on some questions he is more relevant than ever. But to understand how so, we have to move beyond the Census Bureau's cooked statistics.

ATC 74, May-June 1998

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