The Gilded Age Explained: An Era of Wealth and Inequality

What Was the Gilded Age?

The Gilded Age, which roughly spanned the late 1870s to the early 1900s, was a time of rapid industrialization, economic growth, and prosperity for the wealthy. It was also a time of exploitation and extreme poverty for the working class.

Reconstruction preceded the Gilded Age, when factories built as part of the North’s Civil War effort were converted to domestic manufacturing. Agriculture, which had once dominated the economy, was replaced by industry. Ultimately, the Gilded Age was supplanted by early 20th-century progressivism after populism failed.

The term “gilded age” was coined by Mark Twain and Charles Dudley Warner in a book titled The Gilded Age: A Tale of Today. Published in 1873, the book satirized the thin “gilding” of economic well-being that overlaid the widespread poverty, corruption, and labor exploitation that characterized the period.

Economic and Industrial Developments

As the United States began to shift from agriculture to industry as a means of economic growth, people began to move from farms to urban areas. Railroads expanded, industry began to mechanize, communication improved, and corruption became widespread.

Railroad Expansion

Railroads expanded dramatically in the U.S. in the 1870s. From 1871 to 1900, 170,000 miles of track were laid in the United States, most of it for constructing the transcontinental railway system. It began with the passage of the Pacific Railway Act in 1862, which authorized the first of five transcontinental railroads.

Mechanization of Industries

The late 19th century saw an unprecedented expansion of industry and production, much of it by machines. Machines replaced skilled workers, reducing labor costs and the ultimate selling price of goods and services. Instead of skilled workers seeing a product through from start to finish, jobs were often limited to one task repeated endlessly. The pace of work increased, with many laborers forced to work longer hours.

Communications Networks

Technological advancements, including the phonograph and the telephone, came into existence during the Gilded Age. So did the advent of mass-circulation newspapers and magazines. Professional entertainers quickly adopted these new forms of communication, making listening and reading news new leisure activities.

Monopolies and Robber Barons

During the Gilded Age, many businessmen became wealthy by gaining control of entire industries. Controlling an entire sector of the economy is known as having a monopoly. The most prominent figures with monopolies were J.P. Morgan (banking), John D. Rockefeller (oil), Cornelius Vanderbilt (railroads), and Andrew Carnegie (steel).

Because of the way they exploited workers with low wages, long hours, and dangerous working conditions, these wealthy tycoons were often referred to as robber barons, a pejorative term used to describe the accumulation of wealth through that exploitation.

Rural Life and Urban Life—Gilded Age Homes

Homes during the Gilded Age reflected the lifestyle and wealth of the homeowner. While the wealthy built magnificent mansions with stately names like Vanderbilt Mansion, Peacock Point, and Castle Rock, many of the less fortunate lived in tenement buildings in cities, where they flocked for jobs, or in the West, in claim shanties—small shacks built to fulfill Homestead Act regulations.

Social Stratification and Inequality

The Gilded Age saw rapid growth in the economic disparities between workers and business owners. The wealthy lived lavishly, while the working class endured low wages and horrid conditions.

Real Wage Increases

The technological changes brought about by industrialization are thought to be largely responsible for the fact that real wages of unskilled labor grew 1.43% per year during the Gilded Age vs. 0.56% per year during the Progressive Era and just 0.44% per year from 1990 to 2005.

By those measures and comparisons, the Gilded Age would seem to be a success. In 1880, for example, the average earnings of an American worker were $347 per year. That grew to $445 in 1890, an increase of more than 28%.

Abject Poverty

“While the rich wore diamonds, many wore rags.” This summarizes the income and lifestyle disparity that characterized the Gilded Age. In 1890, 11 million of the nation’s 12 million families (92%) lived below the poverty line. Tenements teemed with an unlikely combination of rural families and immigrants who came into urban areas, took low-paying jobs, and lived in abject poverty.

Though wages rose during the Gilded Age, they were deficient initially. As noted above, in 1880, the average wages of an American worker were $347 per year ($10,399 today, as of this writing) but had risen to $445 by 1890 ($14,949 in today’s dollars). Given today’s federal poverty level (FPL), which is $30,000 for a family of four, most Gilded Age Americans were excessively poor despite the impressive wage growth of the time.

Labor Unions

The rise of labor unions was neither sudden nor without struggle. Business owners used intimidation and violence to suppress workers, even though they had a right to organize. By 1866, there were nearly 200,000 workers in local unions across the United States. William Sylvis took advantage of these numbers to establish the first nationwide labor organization, named the National Labor Union (NLU).

Unfortunately, Sylvis and the NLU tried to represent too many constituencies, causing the group to disband following the Panic of 1873 when it couldn’t serve all those competing groups. The NLU was replaced by the Knights of Labor, started by Uriah Stephens in 1869. Stephens admitted all wage earners, including women and Black people.

The Knights of Labor lost members and eventually dissolved for two reasons. First, Stephens, an old-style industrial capitalist, refused to adjust to the changing needs of workers. Second, a bomb thrown into a crowd at a rally in Chicago’s Haymarket Square on May 4, 1886, was blamed on the union, driving even more members away.

By December 1886, labor leader Samuel Gompers took advantage of the vacuum left by the demise of the Knights and created a new union based on the simple premise that American workers wanted just two things: higher wages and better working conditions. Thus was born the American Federation of Labor (AFL).

Corruption and Scandals—Muckrakers

Another product of the Gilded Age was investigative journalism. Reporters who exposed corruption among politicians in the wealthy class were known as muckrakers for their ability to dig through the “muck” of the Gilded Age to uncover scandal and thievery.

Notable muckrakers included Jacob Rils, who in 1890 exposed the horrors of New York City slum life. In 1902, Lincoln Steffens brought city corruption to light with a magazine article titled “Tweed Days in St. Louis.” Ida Tarbell put her energy into exposing the antics of John D. Rockefeller; her reporting led to the breakup of Standard Oil Co. In 1906, Upton Sinclair wrote The Jungle to expose conditions in the meatpacking industry. This led to the passage of the Meat Inspection Act and the Pure Food and Drug Act.

Immigration

Many immigrants came to North America during the Gilded Age, with 11.7 million of them landing in the United States. Of those, 10.6 million came from Europe, making up 90% of the immigrant population. Immigrants made it possible for the U.S. economy to grow since they were willing to take jobs that native-born Americans wouldn’t.

While factory owners welcomed these newcomers, who were willing to accept low wages and dangerous working conditions, not all Americans did. So-called nativists lobbied to restrict certain immigrant populations, and in 1882, the Chinese Exclusion Act passed Congress. But millions came despite the obstacles. The Statue of Liberty beckoned, and the “huddled masses” responded. The children of immigrants began to assimilate, despite their parents’ objections. Another hallmark of the Gilded Age was born, as America became a true melting pot.

Women in the Workforce

Industrialization created jobs outside the home for women. By 1900, one in seven women were employed. The typical female worker was young, urban, single, and either an immigrant or the daughter of immigrants. Her work was temporary—just until she married. The job she was most likely to hold was that of a domestic servant.

The Gilded Age also saw an increase in college-educated women. Colleges, including Bryn Mawr, Radcliffe, and Mount Holyoke, opened their doors to women in the post-bellum years. This did not happen without some incredible chauvinism. Scientists of the era warned that women’s brains were too small to handle college work without compromising their reproductive systems. Many, it turned out, took that risk. The predominant fields held by female college graduates were nursing and teaching.

The Black Experience

As reconstruction ended on a state-by-state basis, Black people could migrate away from plantations and into cities in search of economic opportunity, or to move west or south in search of land that they could work for themselves. From 1870 to 1900, the South’s Black population went from 4.4 million to 7.9 million. People found jobs in Alabama, Arkansas, Georgia, Kansas, Louisiana, Mississippi, South Carolina, and Texas, working on railroads and in mines, lumber, factories, and farms. For some, however, sharecropping replaced slavery, keeping Black workers tied to the land without ownership.

For a small set of others, this period led to the foundation of what’s known as the Black elite or “the colored aristocracy,” as was noted by Willard B. Gatewood in Aristocrats of Color: The Black Elite, 1880–1920. Among this group were members such as Blanche Bruce, a Republican senator from Mississippi; Josephine Beall Willson Bruce, a women’s rights activist in Washington, D.C., and the wife of Blanche Bruce; and Timothy Thomas Fortune, economist and editor of The New York Age, the nation’s leading Black newspaper at the time.

Economic Impact and Legacy

The Gilded Age saw the transformation of the American economy from agrarian to industrial. It saw the development of a national transportation and communication network. Women began to enter the workforce as never before. Millions of immigrants took root in a new land. Enterprising industrialists became titans and wealthy beyond measure.

Production and per capita income rose sharply, albeit with great disparity among wealth classes. Earlier legislation, like the Homestead Act, motivated the movement westward of millions of people to lay claim to land that would give them a new start and a chance at the American dream. As America became more prosperous, some of its citizens fell victim to greed, corruption, and political vice. This combination of extraordinary wealth and unimaginable poverty was the ultimate juxtaposition of capitalism and government intervention. The debate continues today.

The Bottom Line

The Gilded Age was critical to the growth of the United States by introducing industrialization and technological advances. It was also a time of political turmoil, greed, and extreme income inequality. The U.S. became the most economically powerful country in the world due to the era. It was a time of unprecedented progress and unimaginable poverty.

The wealth gap between the Rockefellers, Carnegies, Morgans, and Vanderbilts and the rest of the country was palpable. With wealth came greed. With innovation came corruption. Muckrakers, the first investigative journalists, helped uncover the graft, and unions helped labor even the playing field. Ultimately, this “best and worst” of times became another important chapter in the American saga.