Income Inequality Update

INCOME INEQUALITY UPDATE….Via Brad DeLong, here are Emmanuel Saez’s latest (2005) figures on income inequality in America. My contribution is to make the chart more colorful.

The chart shows income excluding capital gains, and as you can see, the top 1% of the population (blue line) increased their share of national income from 16% in 2004 to 17% in 2005. Not bad for one year! Meanwhile, the merely well off (red and green lines) went nowhere. Historically speaking, then, here’s what we’ve got:

  • Top 10%: income share stagnant since 1983.

  • Top 5%: Income share stagnant since 1995.

  • Top 1%: Still rocking and rolling!

This is all pretty rarefied atmosphere, of course. Here’s Saez:

2005 shows a very large increase in income concentration: the top 1% gains 14% in real terms from 2004 while the bottom 99% gains less than 1%….The striking thing about 2003-2005 is the huge increase at the top with quasi-stagnation below the top 1%. In the late Clinton years, the top gained enormously but at least the bottom was also making progress.

Median wages have been stagnant since the mid-70s. Today, the wages of everyone below the top 1% are stagnant. As Andrew Tobias likes to say, it’s a grand time to be rich and powerful in America.