Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data.
The numbers, produced by Emmanuel Saez, an economist at theUniversity of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent.
The disparity between top earners and everybody else can be attributed, in part, to differences in how the two groups make their money. The wealthy have benefited from a four-year boom in the stock market, while high rates of unemployment have continued to hold down the income of wage earners.
“We have in the middle basically three decades of problems compounded by high unemployment,” said Lawrence Mishel of the Economic Policy Institute, a left-of-center research group in Washington. “That high unemployment we know depresses wage growth throughout the wage scale, but more so for the bottom than the middle and the middle than the top.”
Excluding earnings from investment gains, the top 10 percent of earners took 46.5 percent of all income in 2011, the highest proportion since 1917, Mr. Saez said.
http://www.nytimes.com/2013/02/16/business/economy/income-gains-after-recession-went-mostly-to-top-1.html?ref=business&_r=0
What do you guys think about this huge inequality in income distribution? What should we do?
http://www.nytimes.com/2013/02/16/business/economy/income-gains-after-recession-went-mostly-to-top-1.html?ref=business&_r=0
What do you guys think about this huge inequality in income distribution? What should we do?
I completely agree with the assessment that the reason for the disparity is the way in which these groups make their money. But if that is the primary cause, I don't see a reason to do anything about it. The only thing you could do to close the gap is really to tax non-wage incomes. All this does however is discourage the wealthy from investing in the US stock market. They will simply move their money elsewhere in this global economy. Those investments by the wealthy in stocks will have long-term benefits to the lower classes by spurring growth in those industries. The hope here really has to be that the economy as a whole will recover, this will benefit everyone across the board.
ReplyDeleteI feel like this large inequality in income distribution is inevitable and there isn't much to do about it. There isn't much to do to prevent: "The wealthy have benefited from a four-year boom in the stock market, while high rates of unemployment have continued to hold down the income of wage earners." In terms of policies to close the gap, I agree with Travis. But I don't think policy in the long run will change this trend of income inequality
ReplyDelete"[Obama] proposed raising the federal minimum wage to $9 from $7.25 as one way to ameliorate the trend, a proposal that might lift the earnings of 15 million low-income workers by the end of 2015.
ReplyDelete'Let’s declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty,' Mr. Obama said in his address to Congress."
How do you all feel about this? If we look at the Keynesian model, a higher ratio in W/P (increase in wages) will lower employment rate and GDP. So, somewhat short-term we're looking at fewer employed living in poverty, but an increased number of unemployed in poverty...?
As long as the income of the average middle class is moving upwards, we should not mind if the top are moving faster. The amount of money the top 1% have will inevitably bring more money to them. As Travis pointed out, raising taxes will only hurt investments, so the primary focus should to provide opportunities for the poor and raising the income of middle class rather than getting concerned with how rich are getting richer.
ReplyDeleteSure the rich are getting richer from booms in the stock market, but the disparity here isn't one to fret too much about. The poor are not really getting poorer. Real income levels of the poorest 20 percent of Americans have actually risen over time. Further, the individual households that comprise the bottom income bracket do not stay the same. Due to income mobility, The majority of Americans in the poorest 20 percent become wealthier over the course of their lives.
ReplyDeleteI would have to agree with everyone else and say that I don't think this is too much to worry about. It's understandable that the top 1% would have earned more because of the stock market, but I don't think this is anything we need to worry about changing.
ReplyDeleteI think this huge inequality in income distribution is unavoidable. I also agree with everyone that there is not too much to worry about. We can not do anything to prevent the rich from getting richer but we can create more opportunities for the poor.
ReplyDelete