Recently, there have been numerous reports highlighting the distribution of wealth and income inequality in both America and around the world. The news is far from healthy:
- It is currently estimated that by the year 2016, the richest 1 percent will control more than half of the world’s wealth.
- Even more shocking, the combined wealth of the 80 richest people in the world is the same as that of the bottom 50% of the Earth’s population—totaling 3.5 billion people.
- In America, the wealth inequality gap continues to grow as America’s middle class shrinks. The share of American households in the middle class fell from 56.5 percent in 1979 to only 45.1 percent in 2012. And there is no indication this trend will reverse itself.
Regardless of how you think the problem should be resolved, this is not good news.
Numerous economic studies indicate the significant dangers to society when the wealth gap widens—both economically and for personal well-being. One of the most important factors designating first-world countries from third-world countries is the size of the middle class and opportunity for social mobility. I have seen firsthand the damaging effect of income inequality.
There are solutions to this problem and we need to find them.
But recently, I have begun noticing another unhealthy trend. One that may be related to the widening gap, but more likely, finds its root in the human spirit. It too requires a solution, albeit a much easier one to define.
This equally negative trend is the wealth gap we focus on in our mind and the resulting division we artificially create because of it.
Let me explain what I mean with a short story from this past weekend:
On Sunday, I was spending some time with neighbors. Economically speaking, we live very similar lives in our suburban neighborhood outside Phoenix. At one point, one of the guys struck up a conversation with one of the teenage boys in attendance—the son of another friend. In response to a question, the teenager mentioned the Soccer Club he had begun playing for. This Soccer Club, not too far down the road from us, just happens to be located in one of the wealthiest counties in the country.
My friend’s immediate response to this information was telling, “Oh, so you’re on a team with a bunch of rich kids?” The jealousy contained in his voice was difficult to mask.
His statement, I believe, is indicative of how most of us view wealth: “Those with more are the rich ones, not me.”
I mean, never mind the fact that earlier in the day my friend had to decide which of their two vehicles he would drive to the party. Forget the part that we were enjoying fine food and drink in a comfortable, well-decorated home. Disregard that he had enough money to care for his health needs, was making plans to retire in the near future, and had even saved a bit of money for his child’s college education… in his mind, he was not rich. The “other guys” down the street were the rich ones.
We experience this often in our thinking. We usually compare our financial circumstance to those who have more. And as a result, we rarely consider ourselves wealthy. The world is big and there is always somebody with more. No wonder 55% of millionaires do not consider themselves rich.
We see this also on a macro-level in our society. In our country and around the world, “The 1%” has become a derogatory term describing the wealthiest among us. Subtly, it is used to designate the apparent, insatiable greed of those who already own enough. We use it in conversation to draw a sharp contrast between those who are “rich,” and those of us who most assuredly, are not.
Again, because we compare our financial circumstance to those who have more, we refuse to consider ourselves among the rich. But something interesting happens when we begin to expand our comparisons.
Globally, an estimated 6 billion people live on less than $13,000/year. And nearly half the world’s population, 2.8 billion people, survive on less than $2 a day.
According to the non-profit group Giving What We Can, an annual income of $40,000 places you in the richest 2.0% of the world’s population. An income of $25,000/year puts you in the top 3%.
Even a minimum wage job ($7.25 an hour, 40 hours a week, 52 weeks a year) puts you in the top 8% of all people on the planet in terms of income. Adjusting for actual purchasing power makes little difference in the percentages.
In other words, we are the rich ones. When we begin to expand our worldview beyond those who only have more than us, we quickly discover we are already among the wealthiest in the world today. And in most cases, we are the 1%, globally speaking.
We are already wealthy. And this should change entirely the way we live our lives. (tweet that)
This realization invites us to pursue happiness elsewhere. If I already exist in the top 2% of wage-earners in the world, is reaching the top 1.8% really going to increase my happiness index significantly? Maybe having more money is not the answer, maybe I will need to look elsewhere.
It requires us to rethink contentment. The level of income in our countries is just one economic measurement. In addition to income, average home sizes have nearly tripled in the past 50 years, televisions outnumber people in the average American home, and the average British 10-year-old owns 238 toys but plays with just 12 daily. Despite our material accumulation, discontent fuels more desire, more shopping, and more debt. If all that we already own has not satisfied the deepest longings of our heart by now, they probably never will.
Our wealth calls us to embrace a higher standard. Most of the “us vs. them” conversations concerning wealth focus on how those with more should spend their money differently—whether by governmental authority or by personal initiative. But, if “we” became “they,” shouldn’t we try to live by the same standard we called them to uphold?
It opens the opportunity for greater generosity in our lives today. The thinking runs deep in many of our hearts: Once I make more money, I will become more generous. But the research indicates otherwise. We are already wealthy—most of us ranking in the top 2% globally. The time for generosity is now. And maybe the greatest benefit of generosity is the realization that we already have enough.
Are you the wealthiest human being in the world? Absolutely not (I mean, unless you are reading Bill). But that doesn’t mean “rich” is some far off concept you will never attain. In reality, most of us have already achieved it. And this ought to change both how we live and define wealth.
Also, note that many of us are working fewer hours for this wealth. We may complain about the hours we work, but thanks to modern convenience, we no longer have to wash clothes by hand; food preparation is much quicker and more convenient; etc. Thanks to increased productivity, we can meet our needs on very few hours of work–of course, how we define “needs” is where many will complain that this notion is crazy, any why many feel the need to work themselves to death. Of course, hunter-gatherer societies enjoy the most leisure time, but I think I’ve got it pretty darn good.
Stacy B says
Well said Todd:)
“Globally, an estimated 6 billion people live on less than $13,000/year. And nearly half the world’s population, 2.8 billion people, survive on less than $2 a day.”
Could you please support some of this with links and/or additional data? I agree with a lot of what you say, but the math is not adding up for me as the current population on Earth is around 7.1 BILLION people.
The 2.8 billion are a subset of the 6 billion he’s referring to.
Excellent answer, Rochelle!
Thanks! I noticed that 2.8 is nearly half of 6, but I would still appreciate better numbers and sources. When I see outdated numbers, it makes the author look less credible. I found that the clickable words had articles linked to them, but they are not exactly great (one was from 2011 and related to the OccupyWall Street movement). This is an interesting topic and I would love to see some hard data… Are the wages per person or household? Many children, women, and the elderly don’t work. Also, purchasing power varies from country to country, or even among zip codes in one country.
joshua becker says
Maria, the link to the 2.8 billion people statistic source is embedded in the post. The source for the 6 billion people statistic is right here.
I actually have two comments :-)
First, I feel like the richest person in the world EVERY day. I go to bed each night in a SAFE place in a clean bed, and I’m warm and my belly is full. How could I complain?
Secondly, just because someone APPEARS rich, doesn’t mean that they are. Most likely, they are in debt….deep debt…..
And did I mention when I lay my head down, I sleep?
Phil Pogson says
How true about the debt-rich! More fool them.
Really thought-provoking and humbling to think of how we compare ourselves to the wrong side. (And I think this is true in all things … comparison truly is the thief of joy.)
Thank you for this reality check!
We are so wealthy. Just consider how we have:
– Clean, cheap water available at the turn of a dial.
– Vaccinations against deadly and debilitating diseases.
– Free public education (literacy–the ability to read and write).
– Public libraries (freedom of information and access to it).
– A huge standing military force and system of emergency responders (firefighters, police, etc.).
– An overtaxed–but existing–system of shelters, food banks, etc.
– Health, safety, and environmental protection laws (FDA, OSHA, EPA, etc.)
Billions (!!!) of people around the world do not have access to these riches.
Thanks for the reminder, Joshua. I’ve been reading your blog for years.
Mrs. Frugalwoods says
Recognizing my privilege as a well-off American is something that’s been top of mind for me lately. We live such incredibly fortunate lives and I think that approaching life with gratitude is key.
Even when we face challenges, we have the resources to take care of them–we have the money, the access to medicine, clean water, food, shelter, safety, and more. The struggle to simply survive is not our struggle. Thank you for this post.
Phil Pogson says
covetousness – that old fashioned word that rarely gets a look in these days….just sayin’
Catherine Doyle says
I thought you might be intereested in this:
Its within all of our power to make the world change!
Thanks for your thoughts on this. I’ve been working poverty issues for a long time and I see a basic difference between the American poor and the poor in other countries. In America, you are generally shamed if you aren’t an adequately contributing consumer. And you become a hated pariah if your problems cost anyone else money. Other countries don’t seem to be so harsh and unrealistic about poor people like we are.
I am so glad you wrote this. I realized what you write about in my twenties. I worked hard and was so blessed with a good paying job out of college. It was a difficult job but it made me realize that however much you have, someone will have more. If your basic needs are met, it doesn’t matter what other people have. It is an exercise in frustration beyond that and the resulting unhappiness wastes what you have earned and been blessed with. The second part of this post is so inspiring to me. You are right that our wealth should make us more generous. I hope to build that into my own life at every opportunity.
Yes! A thousand times yes! When we wish we had more, we trash talk what we do have, the blessings and what earnings we have from hard work. This idea that we’re entitled to more is a dangerous and enticing one. But ultimately false and hollow. It’s like Gandhi said, “We have enough for everyone’s need, but not for everyone’s greed.”