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Rich get Much Richer: More Wealth for the Forbes 400
by Peter Werbe
According to a yearly study published by United for a Fair Economy (UFE), a Boston think tank, not only are the rich getting richer at the expense of the classes below them, but the pace is accelerating.
For instance, Microsoft billionaire Bill Gates, the richest American, doubled his wealth last year to a net worth of almost $40 billion.
Each year UFE releases its survey, Born on Third Base: The Sources of Wealth of the Forbes 400, to coincide with the World Series and employs baseball language to assess the status of the very rich. Their data tracks the financial and biographical origins of the 400 richest individuals and families listed in the October issue of Forbes Magazine.
Forbes celebrates what they call the bootstrapers, the Horatio Alger stories. says Charles Collins, co-director of UFE, We thought it would be interesting to look at who inherited their way onto the list or had a wealthy head start.
He adds scarcastically that the key to great riches is choosing wealthy parents or grandparents. Two-thirds of those on the Forbes list, according to Collins, started with at least some substantial start-up capital, and 42 percent inherited enough wealth (Born on Home Plate) to rank in the 400 at birth.
Being Born on First, Second or Third Base, according to the study, means the individual began with considerable income or family assistance.
Less than a third actually did the rags to riches route, and are considered by UFE to have Started in the Batter's Box.
The current Forbes poll shows that entry to the coveted circle has become more costly. Last year you needed $415 million to make the list; that's increased this time to a net worth of $475 million. Also, the number of billionaires jumped from 135 to 170, and the average net worth of the wealthiest 400 individuals increased by almost a third from $478 million in 1996 to $623.9 million this year.
Collins finds it troubling that high side money is increasing while an increasing number of Americans have stagnating incomes, declining savings and limited retirement options. The reality is that the American economy has not worked that well for the average person in the last twenty years, he says. Certainly not like it has for the rich.
Census data confirms that trend. The top 5 percent of the population holds 60 percent of the nation's net worth while the rest of us split up the remainder.
The result of this increasing disparity is reported in another recent study, Hunger in a Global Economy: Hunger 1998, released by the Washington, D.C.-based Bread for the World Institute, showing the U.S. with the highest wage inequality of any industralized nation.
According to David Beckmann, president of the food advocacy group, 4 million U.S. households suffer from moderate to severe hunger including many in Michigan. Their 130-page study cites an increase between 1991 and 1993 of 27.6 percent to almost 30 percent of the state's children who are hungry or at risk.
We sat by quietly, says Beckmann, referring to last year's budget debate, while federal efforts to reduce poverty and hunger have been dramatically scaled back. The only thing that got cut were programs affecting poor people.
Bread for the World is urging the U.S. Congress to pass the Hunger Has A Cure bill which would fund nutrition programs that were previously cut or eliminated.
Collins' UFE also wants a change. For the past twenty years, he says, American workers have stepped up to the plate and hit sacrifice flies so our nation's rich can score.
It's time to correct the imbalance.Peter Werbe
The UFE study is available from 37 Temple Place, 5th Flr., Boston MA 02111; 617-423-2148; or at www.stg.org. The hunger report from 1100 Wayne Ave., Suite 1000, Silver Spring MD 20910; 301-608-2400; or at www.bread.org. You can follow the richest American's accumulation on the Bill Gates Wealth Clock at www.webho.com/WealthClock.
Peter Werbe is the Public Affairs Director for WCSX radio in Detroit.
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Last modified: December 11, 1997