Research Shows Affluent Americans Barely Recognize US Income Gap

A new report from the Federal Reserve highlights the bleak economic prospects for young Americans, concluding that millennials are in much worse financial shape than earlier generations (at the same age) in terms of their relative income and wealth. These findings are not encouraging for those concerned with the problem of growing inequality.

Despite the rise of populist anger in President Trump’s USA, inequality received little attention in 2018 from both major parties. But make no mistake, the story of early 21st century US is one of record inequality – and a growing divide between two groups: the haves and the have-nots. Forty percent of Americans hold negative financial wealth, averaging – $8,900 in assets, in the wealthiest country in the world, while another 20 percent hold just 2 percent of wealth. This means that 60 percent of the nation holds virtually no financial assets or holds negative assets in the wealthiest country in human history.

While nearly 60 percent of Americans agreed in late 2017 that there were “strong” or “very strong conflicts” between the rich and poor, many have long been under-informed about how deep the divide between rich and poor runs. Nowhere is this clearer than in the sentiment – shared by 54 percent of Americans – that the US is not divided between haves and have-nots.

To better understand the importance of affluence in how we think about inequality, I designed a survey to ask Americans about the extent to which competing factors influence their opinions of the economic divide. The poll, from late November 2018, was conducted by Qualtrics and includes a nationally representative, random sample of 1,132 Americans.

My poll sought to address two defining trends of our time. On the one hand, millions are struggling harder and harder to afford important services such as health care and higher education, which rank as serious concerns for most Americans, and that most Americans want the government to become more active in addressing. On the other hand is the conservative view that Americans live better today than in the past, due to mass access to affordable consumer goods such as televisions, phones and video games.

I asked survey respondents which of the two competing trends they thought was more relevant to their assessments of whether the US is economically divided. One option stated: “Because virtually all Americans own and have access to consumer goods such as televisions, video games, computers, appliances, and air conditioning, it makes little sense to talk about our society as divided between ‘haves’ and ‘have-nots.’” The other stated: “Because many Americans earn low incomes and struggle financially to pay for health care bills, higher education, and other services, it makes sense to talk about our society as divided between haves and have-nots.” The survey results reveal a country that is split between competing views on inequality. Forty percent agree that the US is not divided because of mass access to consumer goods, while 52 percent agree the nation is divided due to the struggles of millions to afford important services (the remaining 8 percent were reportedly undecided, one way or another, on the matter).

It is hardly news that Americans are polarized in their beliefs. Still, my survey is noteworthy in two ways. First, it shows that it’s possible to increase recognition of the economic divide by prompting respondents to think about the struggles Americans face in covering essential services. Pew Research Center polling over the last few decades reveals that most Americans have never recognized the divide between haves and have-nots. Yet a slim majority of Americans do agree the US is divided when they are prompted to think about the millions who struggle to pay for health care and education.

A second major lesson from my survey speaks to why so many Americans disagree about the existence of the economic divide. Two significant predictors of opinions of the economic divide are income and education, with high income-earners and those with graduate degrees being the most likely to agree the US is not divided. Only a minority of individuals earning less than $100,000 a year agree the US is not divided between haves and have-nots – 28 percent for those making less than $25,000 a year; 29 percent for those making from $25,000 to less than $50,000; and 40 percent for those earning from $50,000 to less than $100,000. In contrast, 66 percent of individuals making more than $100,000 feel the same. Similarly, while a minority of individuals from groups with less than a graduate degree agree the US is not divided – 37 percent for those with a high school diploma or less; 26 percent for those with “some college” or a two-year degree; and 40 percent for those with a four-year degree. In contrast, the number reaches 69 percent for those with graduate degrees. The differences in attitudes are stark, with a 38-percentage point gap in beliefs between those earning less than $25,000 compared to those earning over $100,000, and a 32-percentage point gap between those with graduate degrees and those with a high school diploma or less.

Previous survey findings conclude that Americans – even the poor – have widespread access to all types of affordable consumer goods. If it really is the case that consumer conveniences ensure all Americans live well, then the poorest and most disadvantaged should be at least as likely, if not more likely, than the privileged to agree the US is not divided between haves and have-nots. But this is not the case. Affluent Americans have constructed an elaborate ideological defense, centered on the importance of consumerism as the ultimate sign of prosperity, while marginalizing the economic struggles poor and working-class Americans face in providing for essential services.

The affluence divide in the US matters because of its implications for public policy attitudes. Americans who recognize the economic divide are significantly more likely to support liberal economic policies than those who do not. As my research shows, they are more likely to say that government should prioritize reducing health care costs; that government does not do enough to aid the poor, children and the elderly; that it does too much to help the rich; and that government should commit more to social programs aimed at reducing poverty and inequality.

Put simply, those who recognize the economic divide are more empathetic to those who suffer from rising inequality. But without significant growth in the number of people recognizing this divide, there won’t be enough pressure on government to deal with the problem of record inequality, which remains one of the defining issues of our time.