Given that the Occupy Wall Street movement is rooted in the rapid decline of the American middle class, what strikes many observers as comical is how much better off the American middle class is than the rest of the world. However this movement is a symptom of deepening social strife, political polarization and spreading discontent in the US. It has clearly brought media and policy focus onto the issue of income inequality in the US.

Republican presidential nominee Herman Cain gave his thoughts on the movement last week:

Ronald Reagan used to tell the story about the British worked who stood by the road with his son as a Rolls Royce went by and said someday we’re going to get that guy out of that car. And the American stood by the road as a Cadillac went by and he said some day you’re going to buy that car.

This is a central thesis about American society, that there is clear progress via rapid economic growth, geographic mobility, the resilience of American capitalism, the innovation inherent in American culture, etc. So, as we always try to do at Covert Analytics, let us let the facts speak for themselves:

- Income inequality is sadly high in the US: As measured by the GINI coefficient the distribution of income in the US is below Nigeria, Iran, and Nicaragua!  Note the GINI coefficient is a measure developed nearly 100 years ago by the Italian statistician Corrado Gini and goes from zero (total equality) to 1 (total inequality). View the 2011 rankings:

http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

- Wage growth in the US has stagnated for nearly a decade and education and healthcare costs have soared: total wages as a percent of GDP were as high as 49% in 2000 and are now down to 44%, and using a base of 100 from 1994, CPI has increased to about 150, whereas medical care is reaching 200 and education is reaching nearly 260.

- Migration has been on a downtrend since the 1980s: when one region of America is in a bust you can always pick up and move to a region that is booming, no? A paper by the Federal Reserve Board says migration rates have been in a relatively steady decline since the 1980s.

- CEO and other top executives making ridiculous multiples of  ’average workers’: The Economic Policy Institute recently did a study which noted that in 1985 the average CEO and top executive made approximately 24x the average worker. Now?  262x the average worker. The last study we could find is available here:

http://www.epi.org/publication/webfeatures_snapshots_20060621/

So clearly the underlying US economic fundamentals show that the rising tide has not lifted all boats equally over the past decade, probably longer. What is scary is that similar events transpired in the middle of the Great Depression, with the “bonus army” protests.  History is certainly rhyming …

http://en.wikipedia.org/wiki/Bonus_Army