The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.

— Franklin Delano Roosevelt, Presidential Inaugural Address, 1937

Much has been written over the past several months about the gerrymandering of congressional districts in order to try to win control of the U.S. House of Representatives in the 2026 midterm elections. As in the past, this gerrymandering is unhealthy for both our electoral system and our American democracy.

What is even more unhealthy is the gerrymandering of our American economic system. Just as electoral districts can be restructured to change the distribution of votes along political lines, the economic system can be restructured to change the distribution of income and wealth across economic lines.

The American economy began to be tilted toward those at the top in the 1970’s. It was tilted even more so throughout the twentieth century. And in this 21st century, the economy is stacked in favor of those at the top, and against those in the middle and bottom.

We examine the nature of our gerrymandered economy and key drivers of the gerrymandering in this blog.

The Nature of the Gerrymandered Economy

A strong and healthy economy is one in which income and wealth is relatively evenly distributed. A vibrant and vital middle class is the centerpiece of such an economy. Unfortunately, recent studies show that our American middle class is “shrinking and hollowed out.”

In 2024, the Pew Research Center released a report summarizing data on the middle class and trends from 1970 through 2022. Key points in that report include the following:

• In 1971, 61% of Americans lived in middle-class households. By 2023, the share had fallen to 51%.
• The median income of middle-class households increased by 60% compared to 78% for upper-income households.
• By 2022, the middle-class share of overall household income had fallen to 43% from 62% in 1970.

While the Pew Center concentrated on the middle-class, it also provided data highlighting that “the share of Americans who live in lower-income households increased from 27% to 30%, and the share in upper-income households increased from 11% to 19%.”

In 2020, studies by the RAND Corporation and Economic Policy Institute found that income distribution was relatively equal across all levels of pay before 1974. Since then, equity has disappeared.

The Rand analysis showed that if the distribution had stayed relatively comparable to the post-World War II period, in 2018:

• Workers at the 25th percentile would be earning $61,000, instead of $33,000.
• Workers at the 50th percentile would be earning $92,000, instead of $50,000.
• Workers in the top 1 % would be earning $549,000, instead of $1.2 million.

The Economic Policy Institute study revealed that if wages had tracked with hourly productivity, the average American worker would be earning $10 more per hour.

These statistics regarding income earnings and distribution in the United States are neither positive nor uplifting. The statistics regarding the distribution of wealth are depressing as well.

In 2024, the Congressional Budget office issued a report examining the shares of wealth in the U.S. between 1989 through 2022. It disclosed that:

Over that 33-year period, family wealth was unevenly distributed, and that inequality increased. In 2022, families in the top 10 percent of the distribution held 60 percent of all wealth, up from 56 percent in 1989, and families in the top 1 percent of the distribution held 27 percent, up from 23 percent in 1989. The share of wealth held by the rest of the families in the top half of the distribution shrank from 37 percent to 33 percent over the same period.

The Federal Reserve Board issues quarterly reports on the distribution of wealth by household. These reports enable breaking the wealth distribution down even further. In Quarter 1, 1990, the top 0.1% of households held 8.6% of wealth, the top 1% held 22.8%, and the 50–90% of households held 36.3%. Three and one-half decades later, in Quarter 1, 2025, the top 0.1% held 13.9%, the top 1% held 31.0% and the households in the 50–90% range held 30.0%.

The bottom line in, looking at all of this data in context, is that the bottom lines of those at the very top are growing exponentially, and the bottom lines of those in the middle and lower are growing much smaller.

President Trump’s One Big Beautiful Bill (OBBB) and “reciprocal tariffs” will exacerbate this growing economic inequality.

Because of the tax cuts in the OBBB, Matt Egan and Taime Libby of CNN cite “high income Americans” as major beneficiaries of the bill, noting:

• The net income for the top 20% of earners would increase by nearly $13,000 per year, after taxes and transfers. This would amount to a 3% average increase for those households.
• For the top 0.1% of earners, the average annual income increase would amount to more than $290,000 per year.

James Myall of the Maine Economic Policy Center highlights the fact that the bill increases the amount of money wealthy people can pass on to their children tax-free. This amount beginning in 2026 will be $15 million per person — or $30 million for married couples — with future increases indexed for annual inflation.

The stark contrast to this uneven distribution of benefits is highlighted in an October commentary for the Brookings Institution by Joshua Gotbaum and Sarah Calame, in which they state:

Overall, OBBBA will likely end up reducing benefits for roughly as many families as it helps, with the greatest losses concentrated among the least well-off. the 40% lowest-income households will experience a net loss on average, and the middle quintile will have roughly no net change; there will be ongoing net gains for the top 40% of households.

In terms of tariffs, the Yale Budget Lab estimates that:

• Consumers face an overall average effective tariff rate of 18.6%, the highest since 1933.
• The price level from all 2025 tariffs rises by 1.8% in the short-run, the equivalent of an average per household income loss of $2,400.

Drivers of the Gerrymandered Economy

Multiple factors have created the U.S.’s gerrymandered economy. Its key drivers include: the interests and influence of the wealthiest; the American political process and system; and the growth of private equity firms.

Economist Paul Krugman, political scientists Jacob S. Hacker and Paul Pierson, and journalist Megan Greenwell provide excellent insights into the impact each of those groups has on the nature of the U.S. economy today.

In July and August, Paul Krugman published a seven-part series on inequality. The series goes into considerable detail in tracing the rise of inequality, and the reasons for its prevalence today.

Key points that Krugman makes in his analysis is that the consolidation of the control of political and other forms of power into the hands of the wealthiest, and financialization of the economy, have been primary causes for increasing inequality. Following is some of what he had to say on those issues in his series:

• In any case, power is about more than controlling Congress and the White House. It’s also about institutions and social norms that can enhance workers’ position in bargaining with employers, and limit the opportunity for members of the elite to enrich themselves through self-dealing.
• Beginning around 2000, America saw the emergence of truly enormous fortunes, particularly in finance and technology. Part of the explanation for this abrupt shift lies in technological changes, including the rise of the internet. This, along with financial deregulation, enabled an explosion of financial wheeling and dealing. That explosion in the “financialization” of the economy ultimately enabled the growth of the huge tech fortunes.
• The political and social impact of our modern oligarchs may be even more malign than that of the robber barons in their heyday.
• Yet soaring U.S. inequality since 1980 hasn’t inspired a major government effort to counter that trend. In fact, policy changes, notably Republican tax cuts for the wealthy, have accelerated the growing disparities.

Jacob Hacker and Paul Pierson also touch on the role the wealthy have played in creating inequality but stress the nature of our political system in their assessment. As we noted in writing about their 2010 book, Winner Take All Politics: How Washington Made the Rich Richer — And Turned Its Back on the Middle Class:

Hacker and Pierson concentrate on the policy making process; the nature of our institutional roles such as the filibuster and those representing the “elite” to describe and detail how we got to where we are today in terms of class in the United States.

Hacker and Pierson have continued to do research and write about inequality since the publication of that book. Their 2020 book, Let Them Eat Tweets: How the Right Rules in an Age of Extreme Inequality, written during Trump’s first term as president, points out that while he was always front and center in the media, Trump was representing the views of his devoted followers, and not just his own views.

In her book, Bad Company: Private Equity and the Death of the American Dream, Megan Greenwell highlights how this emergent and growing form of corporate America is contributing to inequality. In her review of Greenwell’s book, Ann Levin of the Associated Press writes that Bad Company is:

a deeply reported, briskly paced and highly disturbing account of how the private equity industry has “reshaped the American economy to serve its own interests, creating a new class of billionaires while stripping ordinary people of their livelihoods, their health care, their homes, and their sense of security.

Near the end of the review, she states:

Greenwell has written an essential guide to an industry that operates largely in the shadows, donates generously to Democrats and Republicans in Congress to keep it that way, and has contributed substantially to the hollowing out of the American dream.

In October, that hollowing out of the American dream continued, and was expanded by the governmental shutdown. The Trump administration’s response to the shutdown was a new round of economic gerrymandering

This round of gerrymandering included withholding billions of dollars in funding for transportation projects in the blue states of Illinois and New York; saying it would “terminate at least $7.6 billion in grants for energy projects in 16 states, 14 led by Democrats”; and threatening to fire 4,000 furloughed government employees in selected agencies.

In conclusion, this economic gerrymandering is as dangerous — perhaps more-so — as electoral gerrymandering for the future of our democracy.

That’s the case because the economic lines will be more difficult to redraw, because that would require returning to a fair and balanced economic system, in an era when the majority of the cards are held by a small group of individuals who do not see the benefit to them of doing so.

It would also require elected officials from both sides of the aisle to come together to vote for what is in the best interest of the country and its citizens, and not for those who contribute the most to their campaigns.

Finally, it would require knowledgeable citizens who do their homework to decide what issues matter, and which politicians care about them, rather than being motivated by personal ideology or political party affiliation.

In spite of this, there is a reason to be cautiously optimistic. That’s due to the fact that Trump’s One Big Beautiful Bill and “reciprocal tariffs” will add more insults and more injuries to the current state of economic inequality going forward.

That’s bad news in the short term, but could bring good news in the long term. That good news would be that this increased economic inequality serves as a wake-up call for concerned citizens of all types to unite, in the elections of 2026 and 2028, to vote to create an economy that is fair and equal, and works for all the people rather than for the privileged few.