A new Oxfam study called “Inequality Inc.” does not mince any words about the state of the global economy. “A brutal world for the many,” it states, and “a wonderful world for the few.”
The citation-rich paper argues that incredible wealth inequality is a feature, not a bug, of unrestrained corporatism. As a stark example, the world’s five richest men have doubled their wealth since 2020, while 60% of global citizens are poorer than before. According to Oxfam, an oligarchic class is using corporate monopolies, artificially low taxes, privatization, and climate change to enrich themselves at the expense of humanity at large.
“Inequality Inc.” is just one of many economic papers that complemented the World Economic Forum’s yearly meeting in Davos, Switzerland. Oxfam’s outlook on world economics is decidedly more negative than its counterparts’. However, many of these papers draw at least one similar conclusion. While the global economy may grow, it’s unclear whether everyday workers will reap many of its benefits.
Four Papers, Four Economic Conclusions
On Jan. 17, job-hunting website Indeed published its “January 2024 US Labor Market Update.” This study gathered data from both Indeed’s internal listings and the Federal Reserve Bank of Atlanta. Indeed’s analysts concluded that wage growth for most workers has slowed down considerably, and is still trending in the wrong direction.
Back to Davos, the “Chief Economists Outlook: January 2024” report from the WEF asked 30 leading economists what they thought the financial world would look like over the next year. A majority of respondents believed that the economy would be “weaker” than before, although the exact effects would vary by region.
Meanwhile, “The makings of U.S. economic exceptionalism” from Wilmington Trust focused on the economic situation within the United States. This paper argued that the U.S.’s strong stocks, flexible labor pool, and innovative businesses will give the country a competitive advantage in the global market.
Stronger Growth in the United States
At first glance, it may seem as though the Wilmington Trust study was the lone outlier in a sea of negative news. The firm’s paper painted a rosy picture of U.S. economics, citing a 3.5% unemployment rate (compared to 5-10% in other developed countries), a surge in new businesses (400,000 per month), and a strong response to the Covid-19 pandemic (2% loss in GDP vs. 4% for comparable countries).
However, the studies from Indeed and the WEF do share some of Wilmington’s optimism.
According to Indeed’s own listings, wage growth in the U.S. reached a staggering 9.3% in 2022, and has slowed to a less-impressive 3.8% today. But on average, wage growth has still improved since 2019, and it’s currently outpacing inflation. (Whether wage growth outpaced inflation over the past two years depends on your data source. Indeed says that it did; the Atlanta Fed says that it didn’t.)
Similarly, economists in the WEF study were somewhat kinder to the U.S. than they were to other global regions. While a significant minority (43%) predicted “weak growth” for the U.S. this year, a majority (57%) predicted “strong growth.”
Regional Differences in Wealth
Still, these findings don’t explicitly contradict anything in “Inequality Inc.” In fact, some of the findings from the WEF, Indeed, and Wilmington dovetail with Oxfam’s research.
For example, Indeed acknowledges that in 2022, inflation grew faster than wages, and that its own estimates of wage growth are much higher than the U.S. government’s. (Indeed does not list every available job in the United States, or have an equal breakdown of jobs across industries.)
This lines up with Oxfam’s damning assertion that wages have fallen significantly behind inflation since 2021. The organization asserts that 791 million workers around the world have lost more than $1.5 trillion in purchasing power due to inflation. That’s approximately 25 days of lost wages per worker, per year.
Similarly, Oxfam highlighted the growing wealth disparity between the Global North and the Global South. While only 21% of the world’s population resides in the Global North, they control 70% of the world’s wealth. (And that wealth, as Oxfam points out, is not equitably distributed, with a disproportionate amount going to billionaires.)
The WEF’s report also highlighted regional differences, using generative AI as a telling example. While 82% of the economists believed that AI would be a boon for wealthy countries, only 48% said the same for developing countries. Their beliefs on the timeline for AI benefits also varied: within five years for wealthy countries, and after five years for developing ones.
Wealth Inequality on the Rise
Even though the Wilmington and Oxfam reports do not cover any of the same data, comparing the two is still a telling experience. “Inequality Inc.” draws attention to just how much money workers have lost over the last few years, and how much they stand to lose if wealth inequality trends continue.
“The makings of U.S. exceptionalism,” on the other hand, mentions workers only 13 times in the main body of the text. Five of these mentions draw attention to the ease with which U.S. companies can fire employees; one of them ponders whether the unemployment benefits during Covid were too generous.
“In just three years, we have experienced a global pandemic, war, a cost-of-living crisis and a climate breakdown,” the Oxfam report observes. “Each crisis has widened the gulf—not so much between the rich and people living in poverty, but between an oligarchic few and the vast majority.”
