Widening US Wealth Gap a Time Bomb for Its Next Administration
People wear face masks as they walk down a street in Flushing area of Queens in New York City. Photo: AFP
The gap between rich and poor is approaching a tipping point of social unrest in the US, and the recent anti-racism protests and crowd violence in some American cities could just be a reflection of such dangerous development.
In the second quarter of this year, US households' net worth grew nearly 7 percent quarter-on-quarter to $119 trillion, thanks to factors like stock market rally, according to data released by the Federal Reserve on Monday. But the seemingly robust wealth growth doesn't necessarily represent an overall economic recovery as most of the gains went to the most affluent families, while millions of poor people saw reduced income or even lost their jobs. According to research group Opportunity Insights, the lowest-paying one-third of jobs remain 16 percent lower than their levels before the coronavirus pandemic.
The US society has long been characterized by severe economic inequality, with the richest 10 percent of Americans owning more than two-thirds of the nation's wealth. Instead of narrowing the gap between rich and poor, the pandemic has actually widened the wealth gap by depriving the poor of low-paying jobs. Now as the economic chaos caused by COVID-19 nears its sixth month in the US, many Americans are under the threat of hunger for the first time in their lives. According to data from Feeding America, the country's largest hunger relief organization, an extra 17 million people in the US could face hunger problem due to the fallout of the coronavirus pandemic, bringing the total number to 54 million. It is hard to imagine hunger becoming a problem for people living in the world's largest economy that produces sufficient food for everyone.
What's even worse, the economic inequality has caused intensified social conflicts and turmoil amid the increasingly depressing economic doldrums. To a certain extent, the violence in the anti-racism protests this year underscores the anger unleashed by the poor group toward the widening gap between rich and poor.
Since US President Donald Trump came to power four years ago, while some economic indicators seemed to have painted a good economic picture before the pandemic, the country's wealth inequality failed to receive the deserved share of attention from the Trump administration. Now the pandemic has exacerbated the problem, which may become a major source of social unrest risk for the next administration. If the government continues to underestimate the seriousness of the issue, one day the economic inequality will eventually reach a tipping point where the entire economic system will have to face the disastrous consequences of social turmoil.
Generally speaking, in addition to offering cash subsidies to the poor, authorities also needs to create sufficient jobs to offset the lost ones to narrow the wealth gap amid the pandemic.
Yet, given the epidemic completely out of control in the US, its economy is unlikely to provide enough jobs any time soon. In this sense, the next administration will face the daunting challenge of preventing American society from falling into a complete upheaval triggered by the economic plight of tens of millions of people.