judging by the soaring rate of investment in mutual funds, and the relaxed attitude of most Americans to this week's stock market gyrations, most of us are pretty comfortable capitalists these days. All the important economic indicators point to continued growth with little or no inflation. Opinion polls suggest we are happy with our jobs in particular and the way things are going in general. Is the rising tide indeed lifting all boats?
To close out Salon's Money week, we asked Andrew Hacker,
author of the recently published "Money: Who Has How Much and Why"
(Scribner) to explain why some of us are still driving jalopies while others fly around in Lear jets, what color we should make our parachutes if we want to be rich, and if we don't, can we just get by?
You write that there are five times as many millionaires now as there were 15 years ago. Why is that?
Karl Marx said "the rich will get richer." What he didn't say was, "And there will be more of them." And there are indeed. There are several reasons why. We have more million-dollar jobs, more athletes, more entertainers, more executives, more sneaker makers. And in Silicon Valley, although not that many people are going to make a million a year, employees are given company shares.
What are the other hot moneymaking careers right now?
It used to be that you went into medicine to make money. Now "hot" is any field where there aren't enough qualified people, so there's a mad rush to hire and companies end up bidding for talent. In L.A. there aren't enough good people to write scripts. On Wall Street, people in orders and acquisitions are hot.
How important is getting a Harvard MBA to set you on the road to riches?
Apart from jobs that you really need an advanced degree for -- like dentistry -- once you've got a B.A., you're going to be judged on how you perform. CEOs of our largest companies tend
to be B.A.s or MBAs. But they come from Tennessee Tech as well as from Harvard. There are only 11 Ivy League graduates out of the top 100 CEOs. There is a lot of myth about the Ivy Leagues. I looked at the Princeton class of 1963. Those men are 55 now. They should have made their mark, but, wow, are they disappointing! They are average guys with ordinary jobs.
Is the American Dream of upward mobility still a reality?
We actually have quite a lot of people who move up. Many of them are second-generation immigrants. Several of America's top CEOs, like Andy Grove of Intel, were born abroad.
So much for the rich. How big is the gap becoming between them and the rest of us?
There's a pot that contains four and a half trillion dollars -- all
the money that is given out for incomes in this country and is then
distributed among households. Today, the top 20 percent of the country's households have incomes of $70,000 a year or more. That top 20 percent now gets a much bigger proportion of that pot than ever before. The money is swishing upwards, not just to the very rich, but to the upper middle class. That's why we see so many fancy sport utility vehicles.
But there are people who are left behind. We have more households headed by single moms than ever before; this is the biggest impoverishing factor in keeping the bottom 20 percent from getting more than 4 percent of the pot.
You point out that black Americans now earn $577 for every $1,000 earned by their white counterparts. Twenty years ago it was $605 for every $1,000. What's going on?
Half of black households don't have a resident husband and that has pulled the black numbers down. Some of the men that might have been husbands are in prison. In the past, there were more blue-collar jobs, a lot of them held by black men who were good husbands and providers. What has happened is that there aren't many white-collar, upper-middle-class positions open for black people, particularly black men, outside of government, education and perhaps social services. Very few businesses have black executives -- they'll have one or two for community relations or special markets.
So, affirmative action hasn't helped black upward mobility very much?
The black middle class are predominantly in the more liberal
nonprofit sectors, like government, that have implemented affirmative
action. The black middle class, in that sense, has been a product of
affirmative action. Look at Colin Powell, he said himself he never would
have become a general without affirmative action. In the private sector,
black men, apart from a few construction-type jobs, have not benefited from
it. The biggest beneficiaries of affirmative action have been women -- black
But they're still earning less than men.
The slogan 20 years ago was "59 cents to the dollar." Women who now have the same years on the job, and the same commitment as their male counterparts, now average 85 cents on the male dollar. The discrepancy is due to the fact that women get to about the $70,000 annual salary level, but very few get beyond that. This is the glass ceiling.
So sex, like race, still determines where you are on the economic
Right. Apart from the nonprofit sector -- they are quite happy to have a woman as the head of a college -- many businesses don't want to have too many women in higher, visible positions because they are afraid it will change the image of the company. I mean, can you imagine a female Michael Eisner? I can. Her name is Martha Stewart. But there aren't too many of them.
How does that disparity play out in the professions, like
medicine and law? Does a woman orthopedic surgeon make 85 percent of what a man makes?
Yes. The men at the top are probably professors at prestigious medical schools. There are very few women medical professors, a few, but not many. Women are also much less likely to go into orthopedics. They are more likely to be psychiatrists, pediatricians and Ob/Gyns, which are all lower-end earners.
And no matter what the sex, as you point out in the book, an
experienced teacher makes less than an attorney just out of law school.
And I could say, with great indignation, "Isn't that awful." But people go into teaching knowing beforehand that they will not get rich. Although the one profession which is most apt to have two professional incomes in the household is teaching. Virtually all the women who you were taught by are married to people who also have incomes. Which means we don't have to shed too many tears here. Teachers are not doing that badly, compared to others. And
teaching is one of the most unionized professions.
Is poverty spreading upwards? Can people making, say $16,000 to 17,000 a year get by in this economy?
Beginning flight attendants are paid $17,000 a year, and there are plenty of applicants. In no way do these people consider themselves poor, or "working poor." The way they do it is to double up. They have roommates, they find bargains in various ways. These people tend to be younger people who are postponing marriage and children. They look around, they try being a flight attendant, or a journalist, but they don't consider themselves poor. And that has been the genius of American capitalism. Minimize the number of people who think of themselves as poor.