Why Spreading Profits and Capital Ownership is the Best Way to Reduce Income Inequality in America

Source: Joseph R. Blasi, Douglas L. Kruse, Richard B. Freeman, Scholars Strategy Network, Key Findings, July 2015

The United States is losing its once great middle class – and ways must be found to spread the fruits of economic growth if current trends are to be reversed. Capital ownership and capital income – ownership of companies, stocks, bonds, land, and financial instruments – have become very unequally distributed. Meanwhile, wages and salary gaps are growing, in part because the pay of many top earners is linked to capital income. The top ten percent of U.S. households now control almost three-quarters of all wealth and more than four-fifths of all financial assets. Half of households own no stock, many have meager financial holdings, and a quarter have zero or negative net worth. Most middle-class families have seen their wealth decline since the 1980s, while ownership of capital and the income it generates skews toward the top. By 2011, 57% of all capital gains and capital income went to the top one percent, and 86% to the top fifth.