World's wealth increasingly with elite few

A luxury car is parked outside the Monaco casino in Monte Carlo, a playground for the world's wealthy. Photo Getty Images
A luxury car is parked outside the Monaco casino in Monte Carlo, a playground for the world's wealthy. Photo Getty Images
As business and political leaders gather in Davos, Switzerland, to discuss the improving world economy, new evidence emerged about how much the rich have become richer - and how much further the poor are falling behind.

The 85 richest people on Earth now have the same amount of wealth as the bottom half of the global population, according to a report this week by the British humanitarian group Oxfam International.

The findings highlight the widening gap between rich and poor ahead of the annual World Economic Forum this week. The report, and others recently on the issue, could boost efforts in Washington to increase the federal minimum wage, which President Barack Obama has made a priority.

"It is staggering that in the 21st century, half of the world's population own no more than a tiny elite whose numbers could all sit comfortably in a single train carriage," said Winnie Byanyima, Oxfam's executive director.

"Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table," Byanyima said.

The bottom half of the population - about 3.5 billion people - account for about $1.7 trillion, or about 0.7 percent of the world's wealth, according to the Oxfam report, titled "Working for the Few."

That's the same amount of wealth attributed to the world's 85 richest people.

Those wealthy elite are a small part of the richest 1 percent of the world's population, which combined has amassed about 46 percent of the world's wealth, or $110 trillion, according to the report. The top 1 percent had 65 times the total wealth of the bottom half of the population.

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, said he's not surprised by the Oxfam report and others showing increased inequality between rich and poor.

"As long as we maintain high rates of unemployment, I don't see any prospect of reversing this situation," Baker said. "The only time where workers in the middle and bottom of the wage distribution were able to achieve sustained gains was in the late '90s when we had low unemployment."

He's less concerned with measures of wealth, which have been inflated by stock market gains and could reverse with a market downturn. But he noted that income growth for poor and middle-class Americans has lagged behind that of the rich in the last three decades.

The Oxfam findings and others should help build support for an increase in the federal minimum wage, Baker said.

In a report last week, the World Economic Forum said widening income inequality was the risk most likely to cause serious damage in the next decade. Obama recently called the expanding gap between rich and poor a bigger threat to the U.S. economy than the budget deficit.

A Gallup poll released Monday found two-thirds of Americans were dissatisfied with the way income and wealth are distributed in the nation. The wealth gap was a factor in nationwide rallies last month by fast-food workers seeking higher wages.

Oxfam said the United States has led a worldwide growth in wealth concentration.

The percentage of income held by the richest 1 percent in the U.S. has grown nearly 150 percent from 1980 through 2012. That small elite has received 95 percent of wealth created since 2009, after the financial crisis, while the bottom 90 percent of Americans have become poorer, Oxfam said.

The uneven gains of the economic recovery, in which many people have had to take lower-paying jobs, have exacerbated income inequality, said Christine Owens, executive director of the National Employment Law Project.

"The people who are losing ground are the people in the middle and the bottom" of the economic spectrum, Owens said.

 

There also are concerns about the broader effect of the wealth gap.

"Income inequality is also socially destabilizing," Owens said. "So it's not just a question of fairness; it's a question of how do we preserve a functioning democracy, and it's difficult to do that if we don't have broadly shared prosperity."

The problem exists worldwide, Oxfam said.

The share of wealth owned by the richest 1 percent since 1980 expanded in all but two of the 26 nations tracked by researchers in the World Top Incomes Database. That has put a "massive concentration of economic resources in the hands of fewer people," the report said.

Falling taxes for the rich and an increased use of tax havens have helped widen income inequality, Oxfam said.

The group called on World Economic Forum participants, which include some of the wealthiest and most influential corporate executives, to take steps to reverse the trend.

Among other things, Oxfam wants them to support progressive taxation, pledge not to dodge taxes, pay a living wage to workers at their companies and push governments "to provide universal health care, education and social protection" for their citizens.

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