Richest 1 percent earn biggest share since '20s

Top 10 percent take home a record 48.2 percent of total earnings in U.S.
Associated Press
Sep 11, 2013

The gulf between the richest 1 percent and the rest of America is the widest it's been since the Roaring '20s.

The very wealthiest Americans earned more than 19 percent of the country's household income last year — their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.

U.S. income inequality has been growing for almost three decades. And it grew again last year, according to an analysis of Internal Revenue Service figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of them, Berkeley's Emmanuel Saez, said the incomes of the richest Americans surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.

In 2012, the incomes of the top 1 percent rose nearly 20 percent compared with a 1 percent increase for the remaining 99 percent.

The richest Americans were hit hard by the financial crisis. Their incomes fell more than 36 percent in the Great Recession of 2007-09 as stock prices plummeted. Incomes for the bottom 99 percent fell just 11.6 percent, according to the analysis.

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

The top 1 percent of American households had pretax income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.

The gap between rich and poor narrowed after World War II as unions negotiated better pay and benefits and as the government enacted a minimum wage and other policies to help the poor and middle class.

The top 1 percent's share of income bottomed out at 7.7 percent in 1973 and has risen steadily since the early 1980s, according to the analysis.

Economists point to several reasons for widening income inequality. In some industries, U.S. workers now compete with low-wage labor in China and other developing countries. Clerical and call-center jobs have been outsourced to countries such as India and the Philippines.

Increasingly, technology is replacing workers in performing routine tasks. And union power has dwindled. The percentage of American workers represented by unions has dropped from 23.3 percent in 1983 to 12.5 percent last year, according to the Labor Department.

The changes have reduced costs for many employers. That is one reason corporate profits hit a record this year as a share of U.S. economic output, even though economic growth is sluggish and unemployment remains at a high 7.2 percent.

America's top earners tend to be highly paid executives or entrepreneurs — the "working rich" — instead of elites who enjoy lives of leisure on inherited wealth, Saez wrote in a report that accompanied the new analysis.

Still, he added: "We need to decide as a society whether this increase in income inequality is efficient and acceptable."

 

Comments

Sandusksquach

Raise taxes on them. BAM!

8ballinthesidepocket

They already pay 92% of all taxes surely paying the freight for a lot of lazy no accounts.

The New World Czar

Hey whatta ya know, this one didn't get blamed on Bush.

grumpy

It is the wonder of compound interest. I make more on the money I have invested since I was 10 years old than the wages I earn for the last 10 years. I expect those who are in the 1% have done the same. Save for 40 + years and that is what happens when you save as much as you can and watch your investments. It isn't brain surgery... it is math (science if you prefer). I didn't make 6 figures till I was almost retired. Now I work part time ( I work in my hobbies) and live on what I make, (since I have NO DEBT) that comes from discipline, and the extras, like world travel , come from the investments and union pension... which is an investment... just not under my control. My other investments are under my control. I lived within my means and saved every week, every month every year.

Ifg yuou spend every dollar to live your life you will not save or invest like the 1% does. Their investments are rising with the Dow. if you haven't invested... you aren't keeping up with those who do invest. Whose fault would that be?

bullydogs1971

so why you so grump?....lol

coasterfan

And yet, middle class Republicans still support fiscal policies that increase the income gap between the 1% and the rest of us. The rich, of course, are counting on stupid people supporting this massive redistributing of our money UPWARDS.

Some will disagree, but that doesn't change the basic facts and statistics one bit, does it?

The Hero Zone's picture
The Hero Zone

I ask as an open minded student seeking your wisdom as a retired teacher; and I don't ask these questions sarcastically.

What do you believe this middle class to be? Additionally, what do you propose to punish people who make more than others so that we can correct this perceived societal inequality? Or if not punish, what can we do to lift those in financial despair and (even through no fault of their own) ignorance upwards so that they too can benefit from saving, investing, participating in, and avoiding being victims of the marketplace?

As it is fair to attempt to answer my own questions I will state that I believe the middle class to be a meaningless, archaic, divisive term that is defined differently among different people (or is just too broad to really be descriptive). I would not seek to punish those who make more than myself nor feel jealousy toward them. Instead I would devise ways that in accordance with a class-free society put into place economic and educational policies that benefit all.

Education, I am sure you'd agree, is what is the great equalizer. Even a prior story on The Register reported the disparity between dropouts and diploma holders. Facts and statistics, again.

Why are we even arguing over those income results - facts and statistics - like THEY are the problem instead of looking at the root causes for disparity? If I am shot please remove the bullet, don't sew it in me just to stop the bleeding! It is none of yours nor my business what someone else makes in private life and why are we promoting petty jealousy with an "income gap"?

What law, scripture, doctrine, contract, or other document dictates we should all make the same money, be guaranteed equal results, or that there "should" be no gap in income earned among a nation of 310+ million people? Do we just presume so? "It is just right." I am sure those geocentrists would say the same thing back prior to Copernicus based on their obvious, collaborative thoughts.

I'm not trying to be snide, sarcastic, nor pretentious. You say that you were a teacher and I KNOW you are passionate about topics like this. I accept that wholeheartedly and ask you these questions in good faith. I am tired of this "1%", "middle class", "income gap" parroting from those on the left just as my ears bleed and eyes roll back every time someone on the right says "welfare queen" etc. I seek social justice as I presume you do, too, but that can only be explored through meaningful dialog and not buzzwords.

So, what can we do in order to address the root cause (not effect) of socio-economic disparity?

HoraceMann

No, you're not "...trying to be snide, sarcastic, nor pretentious..."

You're trying to deflect Coasterfan's pretty good point by changing the subject.

Contango

Re: "increase the income gap between the 1% and the rest of us."

I assume that you and your spouse have invested retirement assets; if so, you are a part of the problem as you perceive it to be Comrade Teach.

Also, where do you think that your public employee health and welfare plans invest assets in order to pay you and your spouse's (taxpayer guaranteed) benefits?

Don't go crying "poor," your BS is easily seen through.

8ballinthesidepocket

Who do you include in your "stupid people" remark? Yourself??

goofus

Facts or hopefull wishes! Name one of Obozo's plans or fiscal policy that has done anything!!!!!!!!

grumpy

Savers who invest increase their net worth. Spenders go into debt and decrease their net worth, by paying interest on debt. . it hasn't changed for centuries. Fewer save than borrow. The dow has increased. the investors,invest in what makes them money. the borrowers pay interest on their debt. Which increases the net net worth?

The more I made the more I invested. the more I invested the more I had to invest. It is math... and common sense. If you don't invest you don't increase your net worth. QED It ain't rocket science.

Contango

Re: "Savers" & "Spenders"

From "Rich Dad, Poor Dad":

The rich tend to buy assets that appreciate and the poor tend to buy those which depreciate.

H*ll, when I first became eligible for an IRA, I borrowed the money in order to contribute!!!

From the Grave

Hasn't that been the plan all along? Why else do you ship our unskilled labor jobs overseas?
But we all end up in the grave, under 6 feet of dirt...

Minuteman

In the headline, the word "share" is the key word. The idea is to impress upon the public the unfairness of the rich. They are taking more than their fair share. The pie should be split up evenly for all of us. It isn't out there for the hardest working to get more. It is there for all to share in equally. Therefore, the richest one percent shall again be darned to heck because of their greed. We are also led to believe the richest one percent got there by greed and dishonesty. Except for Oprah and Al Gore, they're alright. They aren't stealing our fair share.

grandmasgirl

I agree. When the 401 plans first started, I took part. I couldn't afford to invest much, but along with my contributions to Social Security and what I saved in the bank, it steadily increased. When I retired, I was glad that they took those Social Security payments out of my check. I was glad I invested in a 401. I feel sorry for the young people who work and won't get these benefits. Especially since they have to support so many of those that NEVER worked.

The Hero Zone's picture
The Hero Zone

Many of us young people aren't entirely convinced that SS will be around when we are supposed to claim it and thus our money is going into a black box to never be seen again. I would be much happier with a private option for my SS funds, as I am sure many others would be too. Let me participate in the market and reap its benefits instead of sitting on the sidelines while those in the market pass me by.

Minuteman

I was trying to show the disadvantage of going the socialist route. You have no choice to contribute to SS, it's the law, so "contribute" is the wrong word. You "pay". Unless you decided not to work, then you wouldn't pay income tax either. Being forced to pay into SS knowing it's a ponzi scheme is foolish.

We need control of our income, not someone saying they know better for us, and that we won't have any money for retirement and will be destitute if they don't take care of our money for us. Then blame all the economic problems on successful people, generating hate for the evil 1%.

We need to restore public education to the level where graduates can think for themselves. The dependency education must stop.

Contango

Re: "according to an analysis of Internal Revenue Service figures,"

So information obtained by way of the enactment of the Progressive 16th Amend. is being against citizens for Progressive class warfare purposes.

1913 - The year of the beginning of the end of individual and economic freedom and liberty in the U.S.

http://leadershiptofreedom.com/2...

Fromthe419

It all goes back to 1913 Contango, the enactment of the Federal Reserve was the biggest farce ever pulled over the eyes of the American public. We lost Liberty, Freedom and the Pursuit of happiness in that single piece of legislation. Those that complain about the 1 percent, need only to look back of the creation of money as debt to the American people. Right, Left or what ever you all should be pissed at our current monetary policy. We all should be ashamed of the financial situation we are leaving our children and grandchildren.

kURTje

All hail Bernie Madoff.

Contango

Woulda liked to have seen that liberal *ss clown & crook Jon Corzine in a perp walk.

P.S. Madoff was a heavy Democrat party contributor.

http://www.opensecrets.org/news/...

Contango

I'm assuming that the above photo of the "flapper" is from the "Roaring Twenties."

Well, if anyone wants to investigate what economic forces caused the Roaring Twenties, one would do well to examine the Depression of 1920.

Never heard of the Depression of 1920? Most haven't.

"The Depression You've Never Heard Of: 1920-1921"

http://www.fee.org/the_freeman/d...

grumpy

"The Depression You've Never Heard Of: 1920-1921"

The best way to handle a depression is not to participate in it in the first place.

When the last economic slowdown occured I took my investments into cash, precious metals and real estate... mostly cash (money markets) they didn't pay much, but didn't go down like the Dow or other stocks. With mutual funds you can usually move the money around in the fund family for no cost, with just a phone call, if you know where your money is and have a clue what can be/is happening.

Contango

Re: "I took my investments into cash, precious metals and real estate..."

Hope it's working for you.

Problem: Not knowing when to get out and not knowing when to get back in causes most retail investors to buy high and sell low.

I'm essentially "buy and hold" with periodic reallocation of assets.

The S&P 500 low in Mar. '09 was 666.

Anyone who didn't get back in has so far missed out on a 150% plus increase.

grumpy

"Problem: Not knowing when to get out and not knowing when to get back in causes most retail investors to buy high and sell low."

My retirement funds are mostly in mutual funds. I put them into money market if I think the market is going to make a significant drop. If I stay in the same fund family the cost to move it is zero. Then I just have to decide which fund to put it into when I think the market is going back up. My retirement money stays in mutual funds, where I watch them and keep them in the fund families where I can move them in and out of various funds... at no cost.

My investment money is where I speculate. I take chances there and don't mind overloading in a sector... and have made out rather well, but it is speculating. Every now and then I take out money from the speculating "pool" and put it into mutual funds for retirement or long term savings.

You must follow Motley Fool on investing. I used to read them and mostly agree with their reasoning... but it has been years since I read them.

Contango

Re: "You must follow Motley Fool,"

No, Jack Bogle and others.

One of my favorite investment books:

http://www.amazon.com/Winning-Lo...

grumpy

Both Bogle and Motley Fool advocate index funds in broad strokes... and I have a good percentage in those also... but I do have my mad investment money, that when I started actively investing. A small amount that I started "actively managing. It grew faster and larger and I take some out for vacations and even add to savings and retirement. But so far that mad investment money grows faster, but my retirement and savings money is in rock solid investments such as the index funds and other sector mutuals. I have fun and actually make more with the mad money but it is something I know is "at risk", and can be reduced at a market whim, or even disappear, if such a thing happens.

Contango

Re: "I started actively investing."

Yea, I 'had' a brokerage account, made a few bucks here and there, however, I've kinda batten down the hatches recently and have been dollar cost averaging it into (GLD).

I listen and read all the BS from Max Keiser, Martin Armstrong and others and figure that this bull market in stocks and bonds will probably peter out in the next yr. or so.

Martin Armstrong figures that the SHTF in Nov. 2015.

We'll see....

http://armstrongeconomics.com/ar...

grumpy

" have been dollar cost averaging it into (GLD)."

I never fell into the dollar cost averaging thing. I have been buying physical gold in the dips. I go to Temperance, Michigan and buy there since I regularly pass through, No sales tax and the best rates I have seen around. I am no where near what I had in gold in August and September 11 when I sold out. I was lucky? when I saw it coming to an end. Gold, oil, and some real estate is where my "investment mad money" is going now mostly. There are others but that is the top 3 in quantity.

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