Rob Reich Says America's Wealth Gap More Extreme Than It's Been In Over A Century: 'Most Workers Not Earning Nearly Enough...'

Former Labor Secretary Robert Reich has explained how the staggering wealth gap needs to be tackled in order to prevent a collapse of the economy.

Reich observed that over the last 40 years, most people’s wages have stagnated while worker productivity has increased.

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"Where did the economic gains go? Mostly to the top. The wealthy now own more of the economy than at any time since the 1920s. Here is the economic problem: The wealthy spend only a small percentage of their income and wealth. Their spending is not enough to fulfill the consumer demand that keeps the economy churning," he said in a video he tweeted.

He further pointed out how people with lower income spend almost everything they have and that too is becoming very little. "Most workers are not earning nearly enough to buy what the economy is capable of producing. The result is a gap between potential output and potential consumption," he said.

To fill the gap, the economy depends on people going deeper and deeper into debt so they can buy, Reich noted.

Government Spending: The former Labor Secretary also highlighted how more government spending to fill the remaining gap is not sustainable in the long run.

In 2018, when the economy appeared strong, 40% of Americans had negative net incomes and were borrowing money to pay for basic household needs, Reich noted.

"The Fed has had to keep interest rates lower and lower to accommodate this buying. And the government has to spend more and more to fill the remaining gap. None of this is sustainable. At some point, widening inequality causes the economy to collapse," he said.

Noting that America’s wealth gap is now more extreme than it’s been in over 100 years, Reich stated that until this structural problem is resolved, the American economy will remain perilously fragile.

"Closing our staggering wealth gap isn't just the right thing to do. It's essential to save our economy from collapse," he said.

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