What the Recent—and Maybe Future—Shutdown Teaches Us About Wealth in the U.S.
This piece is part of an ongoing series by Boston University’s Dr. Sandro Galea on the intricacies of health care and public health.
The U.S. just emerged from the longest government shutdown in its history, and was on the brink of another shutdown that could start again in a week. Much has been written about the human costs of the shutdown, which include the halting of critical government services like food safety inspections.
While the temporary loss of these functions was bad for all of us, the harm of the shutdown was most acutely felt by the roughly 800,000 federal workers who were forced to go for weeks without a paycheck. Many of these workers were already socioeconomically vulnerable—the average federal worker’s salary is 32 percent lower than that of private sector workers.
Additionally, close to one in five federal workers are black, a population with significant economic challenges of its own. Centrally, black Americans are more than twice as likely as their white peers to have a net worth of zero or negative zero. And they have far less wealth, accumulating just seven percent of the wealth enjoyed by white Americans.
The shutdown exposed the glaring wealth inequities in the country. Commerce Secretary Wilbur Ross expressed incredulity that a brief loss of income could affect people as much as it did. The confusion of Secretary Ross, who is worth an estimated $700 million, was likely grounded in wealth. When one does not depend on a regular income for the resources one needs for daily living, it is easy to forget that if one has no wealth, no assets to fall back on, even a brief loss of income can create significant challenges.
And most saliently, a loss of these resources affects our well-being. Of all the forces that shape our health, the link between money and health is one of the most well established. Much of the data on this link come from the study of income. Less talked about, however, is how wealth shapes health.
Wealth is, in many ways, the best indicator of how the economic resources available to us generate health and safeguard it throughout our lives. Wealth serves as a cushion against misfortune by decoupling our financial security from our income stream and the many factors that can disrupt it.
When we rely solely on income, a sudden shock, like a serious illness, can be catastrophic. Indeed, the number one cause of personal bankruptcy in the US is medical debt. Wealth diminishes this risk. Not only does wealth buy access to the best medical care, it also helps us create the conditions for health in our own lives, forming a buffer against sources of injury and disease. There are limits to this, of course. We all breathe the same air, drink the same water, and share the same planet. Without investing in basic public goods, none of us can be healthy.
The US is a land of deepening inequality, as the gap widens between those who have more money than they could spend in a single lifetime and those who barely scrape by. Despite steady job growth and low unemployment, wages have stagnated, while executive compensation has skyrocketed. In 2016, median household income was about $58,000, while CEOs of the country’s top firms took home an average of $15.6 million. The richest one percent of Americans now controls nearly 40 percent of the country’s wealth. The country’s three wealthiest individuals alone—Jeff Bezos, Bill Gates, and Warren Buffett—control more wealth than the entire lower half of the US economy.
How concerned about inequality should we really be? Is not America a place where a person can start with little and work her way to wealth through sheer determination? We like to think so, but the facts do not support this ideal. In reality, nearly half of all wealth is inherited, a cycle facilitated by our country’s weakened and loophole-friendly estate tax. It is important to note that, just as this works to the advantage of the wealthy, it creates a cycle of disadvantage for those who are excluded from wealth.
Far from being a level playing field, ours is a society where the have-nots are more likely to live paycheck to paycheck, while wealth accumulates at the top of the economy, moving only when it is transferred from one generation to the next.
In recent years, the public debate has begun to address the challenge of inequality, and the implications of vast, concentrated wealth in America. Economic inequality was a key theme of the 2016 presidential race, and it is poised to play an even bigger role in the 2020 election.
Proposals have begun to emerge for how we can counter the destabilizing influence of inequality. Presidential candidate Elizabeth Warren has proposed a yearly three percent tax on household net worth of over $1 billion and a two percent tax on household net worth of over $50 million. Senator Bernie Sanders has proposed lowering the threshold for the federal estate tax, to address the role of inherited wealth in creating entrenched inequality. New York Representative Alexandria Ocasio-Cortez has called for a 70 percent top tax rate on incomes of over $10 million per year.
The fact that these steps are being considered suggests we have reached an inflection point in our understanding of inequality and the need to correct the structural injustice that often underlies it.
The shutdown was a reminder that, for many Americans—those who lack wealth, who are already socioeconomically vulnerable—severe hardship is just a lost paycheck away. This hardship translates directly into less healthy lives. In the US, the wealthiest one percent of Americans can now expect to live between 10 and 15 years longer than the least well-off one percent. This speaks to why health has to be placed at the center of the conversation about inequality and wealth. Inequality not only denies the majority of Americans access to the material fruits of wealth; by denying them these resources, it also denies them health.
Sandro Galea, MD, DrPH, is Professor and Dean at the Boston University School of Public Health. His latest book, Well: What we need to talk about when we talk about health, will be published in May 2019. Follow him on Twitter: @sandrogalea