070116-top1percent-earners1-1

The latest numbers are in (from Emmanuel Saez [and pdf]): while the bottom 99 percent of U.S. households have managed to claw back some of what they lost during the Great Recession, those at the top have done much better. The result is that, while the economic recovery looks a bit less lopsided than in previous years, income inequality in the United States remains extremely high.

As readers can see in the chart above, rom 2014 to 2015, the incomes of the bottom 99 percent grew by 3.9 percent, which is the best annual growth rate since 1999. Still, even after the second year of real income growth for families in the bottom 99 percent (amounting to 6 percent, for a total of a 7.6 percent gain since the recovery began), they’ve still only recouped about 65 percent of what they lost (-11.6 percent) during the most severe economic downturn since the first Great Depression. The bottom 99 percent still have not experienced the recovery they were promised.

But those in the top 1 percent have in fact enjoyed their recovery. They did much better last year (when their incomes grew by 7.7 percent), as they have since the Great Recession officially ended (for a total of 37.4 percent since 2009—thus more than making up for the losses they experienced after the crash, -36.3 percent). As a result, the share of income going to the top 1 percent of families—those earning on average about $1.4 million a year—increased to 22 percent in 2015 from 21.4 percent in 2014, while the share of income going to the top 10 percent of income earners—those making on average about $300,000 a year—increased to 50.5 percent in 2015 from 50.0 percent in 2014, the highest ever except for 2012.

top decile

Thus, as Saez explains, income inequality in the United States remains extremely high, particularly at the very top of the income ladder: the figure at the top of the post

shows that the incomes (adjusted for inflation) of the top 1 percent of families grew from $990,000 in 2009 to $1,360,000 in 2015, a growth of 37 percent. In contrast, the incomes of the bottom 99 percent of families grew only by 7.6 percent–from $45,300 in 2009 to $48,800 in 2015. As a result, the top 1 percent of families captured 52 percent of total real income growth per family from 2009 to 2015 while the bottom 99 percent of families got only 48 percent of total real income growth. This uneven recovery is unfortunately on par with a long-term widening of inequality since 1980, when the top 1 percent of families began to capture a disproportionate share of economic growth.

Thus, what we’ve seen in the United States is a crash that was caused, over the course of decades, by obscene levels of inequality—which has turned into a recovery that has been characterized, over the course of the last few years, by similarly grotesque levels of inequality. Those at the top, who managed to capture a large share of the growing surplus in the years leading up to 2007-08, have restaked their claim on the surplus during the recovery.

The rest of the U.S. population, most of whom actually produce the surplus, continues to fall further and further behind. The bottom 99 percent enjoyed only 35 percent of the gains from the Bush expansion (from 2002 to 2007), suffered 51 percent of the losses from the Great Recession (from 2007 to 2009), and, thus far, have gotten only 48 of total income growth during the recovery (from 2009 to 2015).

It’s clear, then, the recovery from the crash of 2007-08 has been highly unequal—which really should come as no surprise, since the current recovery has been just as unequal as the period of expansion before it and the downturn itself. Since the same forces are at work, now as then, why should be expect a different outcome?

As Albert Einstein once quipped, the definition of insanity is “doing the same thing over and over again and expecting different results.”

Comments
  1. […] Here’s another of my charts—this one for the top 1 percent—from the latest data on inequality in the United States created and disseminated by Emmanuel Saez and Thomas Piketty. […]

  2. […] Chart of the day | occasional links & commentary on Unequal recovery […]

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