By William C. Shelton

(The opinions and views expressed in the commentaries of The Somerville News belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville News, its staff or publishers.)

A common and accurate criticism of the Occupy [fill in one of more than 900 American cities] Movement is that its demands are all over the map. Still, there is one grievance about which Occupiers share moral clarity:  America has become a land of unequal opportunity. They believe that hard work and playing by the rules are not rewarded.

Robert Borosage, president of the Institute for America’s Future, frames it thusly:  “The top 1% rigs the rules and pockets the rewards. And 99% get sent the bill for the party they weren’t invited to.”

After years of analysis, late last month the nonpartisan Congressional Budget Office released its study of income inequality. It found that in 2007, household incomes for the wealthiest 1% of Americans had increased 275% above what they were in 1979. For the three-fifths of households in the middle of the income scale, income growth was just under 40 percent.

This is consistent with an earlier study conducted by the Economic Policy Institute. Its income growth numbers were lower for both the top 1% and the bottom 90%, but the difference is more extreme. (See graph.)

While striking, even these numbers do not express the full extent of income inequality. Actual hourly wages, adjusted for inflation, are at about the same level that they were forty years ago.

For a while, households were able to stay ahead of this trend because individuals worked more hours, and more women entered the workforce. But the average hours worked hit a limit, and during the great recession it has declined.

Productivity—output per worker—has soared, but the workers themselves have not received a share of this increase. Some analysts estimate that the past decade’s productivity gains are the equivalent of permanently eliminating 37 million jobs. (Today’s workforce is 154 million.)  The ratio of employee compensation to total gross domestic product is at an all time low.

How did this happen? There are several reasons, and each of them is consistent with the Occupiers’ critique.

In 1979, CEOs of major corporations earned about 40 times what they paid their average worker. Today it is 300 times. Other senior executives’ compensation increased accordingly.

Financial services companies, whose principals invested their own money in 1979, issued stock, enabling them to make bets with other people’s money. Further deregulation reduced constraints on these bets. Reckless but highly lucrative investments made billionaires.

Changes in the tax code put a proportionately greater burden on the middle class, while reducing the burden on the wealthy. The tax rate paid on the highest levels of earned income decreased from 70% in 1979, to 50% during Ronald Reagan’s first term, to 28% in his second. They increased to 31% during Bush I’s presidency, and to 39.6% during Clinton’s. But during Bush II’s administration they decreased to 30%. So now the rate for the top tax bracket is only 43% of what it was in 1979.

Capital gains are profits made when someone sells an asset, such as real estate or corporate stock, for more than they paid. Capital gains are a much larger component of total income for the wealthy than they are for everyone else.

Tax rates on capital gains are lower than those on earned income. And in 2003, the capital gains rate for those in the higher tax brackets who held assets for more than one year was reduced from 20% to 15%. The wealthiest taxpayers are also much better positioned to take advantage of tax loopholes.

Billionaire Warren Buffet, America’s most successful investor, says that he pays a lower tax rate than does his secretary.

The Earned Income Tax Credit helps keep lower-income working people from sliding into poverty. But it is not available to the unemployed.

Since Reagan took office, the “social safety net” that supported people who did side into poverty has been steadily dismantled. And the federal minimum wage increased more slowly. If it had been were merely indexed to inflation since 1979, it would have been worth $8.59 last year.

Unionization of the workforce dropped from over 25% in 1979, to under 12% today. In turn, pay declined in formerly unionized industries and companies.

Over the same period, Congresses and Presidents rejected fair trade policies in favor of free trade policies. This, and their “strong dollar” policy, savaged the manufacturing sector, which was once an employment bulwark for workers without college educations.

Changes in intellectual property laws have favored large corporations. Now they can even patent naturally occurring plants and genes.

In Loser Liberalism, Dean Baker writes that, ““as a result of patent protection, we pay almost $300 billion a year for prescription drugs that would sell for about $30 billion a year in a free market. The difference of $270 billion is more than 5 times as large as the amount at stake with the Bush tax cuts.”

As unequal as U.S. personal income distribution is, our unequal distribution of wealth is a good deal starker. Most people spend a substantial portion of their income on necessities, while that proportion is small for the wealthy, enabling them to accumulate more assets.

The most commonly used measure of inequality within a distribution is the Gini coefficient. Applying it to the 152 countries for which adequate data are available, the U.S. has the fourth most unequal distribution of wealth.

Émile Durkheim, one of the three principal architects of modern social science, offered a solution. He had no objection to private property or wealth accumulation. But if democracies were going to make equality of opportunity a reality, then they would impose a 100% estate tax.

It’s a provocative concept. But its adoption is inconceivable when the wealthiest and most powerful can buy the public policy that enables them to remain so.