Cracks in the American Dream: Poor wages stagnate while the rich revel
2025-09-17 13:45:35
The US economy appears to be flourishing, but it conceals two parallel, increasingly diverging economic worlds. On one side, high-income earners and seniors, enjoying the strong economic momentum, continue to lavishly spend, with 401(k) retirement accounts and property values skyrocketing. On the other, low-income groups, young people, and minorities have seen their wage growth stagnate and the pressures of life pile up like a landslide. The age-old issue of wealth disparity, once thought to have eased amidst the post-pandemic labor market tightening, has widened again to suffocating proportions. This is not just a stark contrast in numbers, but also a tragedy of the shattered dreams of countless families.
For high-income earners and seniors in the United States, the economy remains their personal playground. They're spending lavishly, from high-end vacations to luxury shopping, creating a scene of prosperity. Low interest rates have made it easy for them to lock in 3% mortgage rates, turning real estate into a cash cow. More importantly, their 401(k) accounts have continued to expand during the bull market, and their property values have also soared. Despite some concerns about the potential for artificial intelligence (AI) to eliminate jobs, their positions are currently rock-solid, with high-paying jobs popping up like mushrooms in the technology and finance sectors. This confidence has fueled their spending spree, driving a boom in the high-end market.
For example, data from Moody's Analytics shows that the top 10% of households—those earning approximately $250,000 or more annually—have seen their share of total national spending climb to a record high, reaching a staggering 49.2% in the second quarter, a significant increase from 45.7% a decade ago. The purchasing power of these wealthy individuals directly supports airlines and the luxury goods industry. International routes and premium cabin tickets remain in high demand. In its most recent quarter, United Airlines reported a 5.6% increase in premium cabin revenue, while economy class saw negative growth. High-end sneakers and luxury brands have also benefited. Amidst economic uncertainty, the wealthy are emboldened to take risky investments due to the increased value of their assets.
In stark contrast to the revelry of the wealthy, the economic world of the low-income has stagnated and even begun to reverse. During the pandemic, low-income groups experienced a rare surge in wages. The extremely tight labor market allowed them to easily switch jobs and secure higher salaries, briefly narrowing the wealth gap. But now, that momentum has receded, replaced by a sharp decline in spending and job losses. Bank of America data clearly outlines this divide: for much of the past few years, wages for the bottom third of workers grew faster than those at the top; but since the beginning of this year, high-income earners have pulled far ahead.
Specifically, in August of this year, the annual wage growth for the bottom third of the population was only 0.9%, the lowest since 2016, while the top third saw a year-on-year increase of 3.6%, the highest since November 2021. This disparity is directly reflected in consumption: low-income households saw spending increase by only 0.3%, barely enough to make ends meet, while high-income households saw a 2.2% surge. Arindrajit Dubey, an economics professor at the University of Massachusetts Amherst, put it bluntly: "With the unemployment rate slowly climbing and job growth falling sharply, wage growth has slowed, especially for low-wage workers. Many had hoped that the reversal of wage inequality would become a long-term feature of American society, but this news has undoubtedly poured cold water on them."
The cooling labor market is one of the main culprits. David Tinsley, senior economist at the Bank of America Institute, analyzed that both federal employment data and internal bank data show that weak employment has hit low-income families far harder than other groups. High-income earners can still rely on the appreciation of stock investments to cushion the blow, but those at the bottom face stark survival pressures. The sharp rise in house prices and rents has exacerbated the situation, making housing a heavy burden. Camelia Kuhnen, a professor of finance at the University of North Carolina at Chapel Hill, put it bluntly: "Today's wealth disparity is primarily related to homeownership. Older and wealthy families who owned homes before the pandemic now have real estate assets that have increased in value by 50%." She divides Americans into two categories: "lucky asset owners and unlucky have-nots." The latter are caught between a rock and a hard place because down payments are out of reach. According to the National Association of Realtors, the median age of first-time homebuyers rose to 38 last year, a record high, from 35 in 2023.
The widening gap between the rich and the poor extends beyond income to deep divisions along racial and age lines. Unemployment rates for Black people and many young people have risen sharply. While the overall US unemployment rate rose to 4.3% in August, the unemployment rate for recent college graduates reached 6.5%—the highest in nearly a decade, excluding the extraordinary period of the pandemic. Labor Department data shows this includes job-seeking individuals aged 20 to 24 with a bachelor's degree. Economists point the finger at artificial intelligence: tools like ChatGPT can now automate many novice jobs, making entry-level jobs disappear in an instant.
Young people's confidence has hit rock bottom. The University of Michigan's consumer sentiment survey shows that those aged 18 to 34 should be the most optimistic, but since the beginning of this year, their pessimism has exceeded that of those over 55. Professor Kuhnen lamented: "This situation is extremely rare. They don't own a house, don't have large investments in their 401(k), and are most worried about losing their jobs in an economic downturn." The situation of minorities is even more severe. The unemployment rate for Hispanics is 5.3%, which is slightly lower than a year ago, but has increased since July; the unemployment rate for African Americans has jumped from 6.1% a year ago to 7.5%. Historically, black workers have been more likely to work in low-skilled positions and face long-term discrimination. When recruitment slows, this injustice is exacerbated. Federal government layoffs have also exacerbated the problem. The high proportion of black people among federal employees has led to a surge in the unemployment rate for black college graduates.
True stories are more touching. In Chicago, the luxury real estate market on the wealthy North Shore is booming: so far this year, the number of luxury homes sold for more than $4 million has exceeded the entirety of last year. Local agent Jena Radney lamented, "We thought the pandemic was crazy enough, but now it's ten times crazier than it was then." She recently sold a $31 million mansion with a private beach, and the buyer was brimming with confidence because the asset appreciated by 25%. But in Chicago's North Side, 40-year-old taxi driver Alfred Baa - who immigrated from Ghana 20 years ago - is struggling. He and his wife and two children rent a house, and he wanted to buy a house, but his dream was shattered by high housing prices and plummeting income. The recovery in airport passenger traffic after the pandemic allowed him to earn $80,000 a year, but recently, wait times often exceed an hour, and this year's income may be only half of that. Grocery bills and expenses have increased significantly, and he said bitterly: "The money I earn is just enough to pay the bills. I can't save a penny this year."
This "split screen" phenomenon isn't an isolated one; it's a national phenomenon. The bull market and robust growth in the tech and financial sectors are creating countless millionaires and billionaires, ripping American life into two parallel worlds. The contrast is particularly stark in Chicago: luxury homes are booming in wealthy neighborhoods, while lower-income immigrants like Ba'a struggle to survive. While the tech boom has enriched the wealthy, it has also exacerbated the fear of unemployment among young people. While skyrocketing housing prices have cheered asset holders, they have left the poor feeling dejected.
In short, the widening gap between the rich and the poor in the United States is not only a stark warning from economic data, but also a wake-up call for social equity. Stagnant wages, raging unemployment, and a housing crisis for low-income individuals are eroding the very foundations of the American Dream. Without timely intervention, this divide will further tear apart the social fabric, leading to unequal consumption, racial tensions, and intergenerational conflict. Perhaps it's time to reflect: How can a country allow half its people to rejoice while the other half despair? Only through policy reforms, such as strengthening job security and housing subsidies, can this rift be bridged and the economy truly benefit everyone. Otherwise, this increasingly divergent "two worlds" will eventually breed even greater turmoil.
Overall, the widening wealth gap has a two-pronged impact on the US dollar. In the short term, consumption and investment activity among high-income groups, coupled with the dollar's reserve currency status, are likely to continue to support its value. However, in the long term, weak consumption among low-income groups, labor market differentiation, and potential policy adjustments could weaken economic fundamentals and increase downside risks for the dollar. If social inequality continues to worsen and triggers broader economic or political instability, the dollar's global dominance could be challenged. Investors should closely monitor the Federal Reserve's policy trends and global economic trends to gauge the dollar's future trajectory.
At 13:44 Beijing time, the US dollar index was at 96.70.
The golden age of high-income earners: a spending spree and skyrocketing assets
For high-income earners and seniors in the United States, the economy remains their personal playground. They're spending lavishly, from high-end vacations to luxury shopping, creating a scene of prosperity. Low interest rates have made it easy for them to lock in 3% mortgage rates, turning real estate into a cash cow. More importantly, their 401(k) accounts have continued to expand during the bull market, and their property values have also soared. Despite some concerns about the potential for artificial intelligence (AI) to eliminate jobs, their positions are currently rock-solid, with high-paying jobs popping up like mushrooms in the technology and finance sectors. This confidence has fueled their spending spree, driving a boom in the high-end market.
For example, data from Moody's Analytics shows that the top 10% of households—those earning approximately $250,000 or more annually—have seen their share of total national spending climb to a record high, reaching a staggering 49.2% in the second quarter, a significant increase from 45.7% a decade ago. The purchasing power of these wealthy individuals directly supports airlines and the luxury goods industry. International routes and premium cabin tickets remain in high demand. In its most recent quarter, United Airlines reported a 5.6% increase in premium cabin revenue, while economy class saw negative growth. High-end sneakers and luxury brands have also benefited. Amidst economic uncertainty, the wealthy are emboldened to take risky investments due to the increased value of their assets.
The vortex of despair among low-income groups: wage stagnation and unemployment storm
In stark contrast to the revelry of the wealthy, the economic world of the low-income has stagnated and even begun to reverse. During the pandemic, low-income groups experienced a rare surge in wages. The extremely tight labor market allowed them to easily switch jobs and secure higher salaries, briefly narrowing the wealth gap. But now, that momentum has receded, replaced by a sharp decline in spending and job losses. Bank of America data clearly outlines this divide: for much of the past few years, wages for the bottom third of workers grew faster than those at the top; but since the beginning of this year, high-income earners have pulled far ahead.
Specifically, in August of this year, the annual wage growth for the bottom third of the population was only 0.9%, the lowest since 2016, while the top third saw a year-on-year increase of 3.6%, the highest since November 2021. This disparity is directly reflected in consumption: low-income households saw spending increase by only 0.3%, barely enough to make ends meet, while high-income households saw a 2.2% surge. Arindrajit Dubey, an economics professor at the University of Massachusetts Amherst, put it bluntly: "With the unemployment rate slowly climbing and job growth falling sharply, wage growth has slowed, especially for low-wage workers. Many had hoped that the reversal of wage inequality would become a long-term feature of American society, but this news has undoubtedly poured cold water on them."
The cooling labor market is one of the main culprits. David Tinsley, senior economist at the Bank of America Institute, analyzed that both federal employment data and internal bank data show that weak employment has hit low-income families far harder than other groups. High-income earners can still rely on the appreciation of stock investments to cushion the blow, but those at the bottom face stark survival pressures. The sharp rise in house prices and rents has exacerbated the situation, making housing a heavy burden. Camelia Kuhnen, a professor of finance at the University of North Carolina at Chapel Hill, put it bluntly: "Today's wealth disparity is primarily related to homeownership. Older and wealthy families who owned homes before the pandemic now have real estate assets that have increased in value by 50%." She divides Americans into two categories: "lucky asset owners and unlucky have-nots." The latter are caught between a rock and a hard place because down payments are out of reach. According to the National Association of Realtors, the median age of first-time homebuyers rose to 38 last year, a record high, from 35 in 2023.
A double blow to minorities and young people: the double-edged sword of discrimination and AI
The widening gap between the rich and the poor extends beyond income to deep divisions along racial and age lines. Unemployment rates for Black people and many young people have risen sharply. While the overall US unemployment rate rose to 4.3% in August, the unemployment rate for recent college graduates reached 6.5%—the highest in nearly a decade, excluding the extraordinary period of the pandemic. Labor Department data shows this includes job-seeking individuals aged 20 to 24 with a bachelor's degree. Economists point the finger at artificial intelligence: tools like ChatGPT can now automate many novice jobs, making entry-level jobs disappear in an instant.
Young people's confidence has hit rock bottom. The University of Michigan's consumer sentiment survey shows that those aged 18 to 34 should be the most optimistic, but since the beginning of this year, their pessimism has exceeded that of those over 55. Professor Kuhnen lamented: "This situation is extremely rare. They don't own a house, don't have large investments in their 401(k), and are most worried about losing their jobs in an economic downturn." The situation of minorities is even more severe. The unemployment rate for Hispanics is 5.3%, which is slightly lower than a year ago, but has increased since July; the unemployment rate for African Americans has jumped from 6.1% a year ago to 7.5%. Historically, black workers have been more likely to work in low-skilled positions and face long-term discrimination. When recruitment slows, this injustice is exacerbated. Federal government layoffs have also exacerbated the problem. The high proportion of black people among federal employees has led to a surge in the unemployment rate for black college graduates.
True stories are more touching. In Chicago, the luxury real estate market on the wealthy North Shore is booming: so far this year, the number of luxury homes sold for more than $4 million has exceeded the entirety of last year. Local agent Jena Radney lamented, "We thought the pandemic was crazy enough, but now it's ten times crazier than it was then." She recently sold a $31 million mansion with a private beach, and the buyer was brimming with confidence because the asset appreciated by 25%. But in Chicago's North Side, 40-year-old taxi driver Alfred Baa - who immigrated from Ghana 20 years ago - is struggling. He and his wife and two children rent a house, and he wanted to buy a house, but his dream was shattered by high housing prices and plummeting income. The recovery in airport passenger traffic after the pandemic allowed him to earn $80,000 a year, but recently, wait times often exceed an hour, and this year's income may be only half of that. Grocery bills and expenses have increased significantly, and he said bitterly: "The money I earn is just enough to pay the bills. I can't save a penny this year."
The Torn Between Two Parallel Worlds: Mirror Images from Chicago to the Nation
This "split screen" phenomenon isn't an isolated one; it's a national phenomenon. The bull market and robust growth in the tech and financial sectors are creating countless millionaires and billionaires, ripping American life into two parallel worlds. The contrast is particularly stark in Chicago: luxury homes are booming in wealthy neighborhoods, while lower-income immigrants like Ba'a struggle to survive. While the tech boom has enriched the wealthy, it has also exacerbated the fear of unemployment among young people. While skyrocketing housing prices have cheered asset holders, they have left the poor feeling dejected.
In short, the widening gap between the rich and the poor in the United States is not only a stark warning from economic data, but also a wake-up call for social equity. Stagnant wages, raging unemployment, and a housing crisis for low-income individuals are eroding the very foundations of the American Dream. Without timely intervention, this divide will further tear apart the social fabric, leading to unequal consumption, racial tensions, and intergenerational conflict. Perhaps it's time to reflect: How can a country allow half its people to rejoice while the other half despair? Only through policy reforms, such as strengthening job security and housing subsidies, can this rift be bridged and the economy truly benefit everyone. Otherwise, this increasingly divergent "two worlds" will eventually breed even greater turmoil.
Overall, the widening wealth gap has a two-pronged impact on the US dollar. In the short term, consumption and investment activity among high-income groups, coupled with the dollar's reserve currency status, are likely to continue to support its value. However, in the long term, weak consumption among low-income groups, labor market differentiation, and potential policy adjustments could weaken economic fundamentals and increase downside risks for the dollar. If social inequality continues to worsen and triggers broader economic or political instability, the dollar's global dominance could be challenged. Investors should closely monitor the Federal Reserve's policy trends and global economic trends to gauge the dollar's future trajectory.
At 13:44 Beijing time, the US dollar index was at 96.70.
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