Striking it Richer:
The Evolution of Top Incomes in the United States
(Updated with 2009 and 2010 estimates)
Emmanuel Saez•
March 2, 2012
.....
The implications of these fluctuations at the very top can also be seen
when we examine trends in real income growth per family between the top 1
percent and the bottom 99 percent in recent years as illustrated on Table 1.
From 1993 to 2010, for example, average real incomes per family grew by
only 13.8% over this 17 year period (implying an annual growth rate of .76%).
However, if one excludes the top 1 percent, average real incomes of the
bottom 99% grew only by 6.4% from 1993 to 2010 (implying an annual growth
rate of .37%).
Top 1 percent incomes grew by 58% from 1993 to 2010
(implying a 2.7% annual growth rate). This implies that top 1 percent incomes
captured slightly more than half of the overall economic growth of real
incomes per family over the period 1993-2010.
The 1993–2010 period encompasses, however, a dramatic shift in how
the bottom 99 percent of the income distribution fared. Table 1 next
distinguishes between five sub-periods: (1) the 1993–2000 expansion of the
Clinton administrations, (2) the 2000-2002 recession, (3) the 2002-2007
expansion of the Bush administrations, (4) the 2007-2009 Great Recession,
(5) and 2009-2010, the first year of recovery. During both expansions, the
incomes of the top 1 percent grew extremely quickly by 98.7% and 61.8%
respectively. However, while the bottom 99 percent of incomes grew at a solid
pace of 20.3% from 1993 to 2000, these incomes grew only 6.8% percent
from 2002 to 2007. As a result, in the economic expansion of 2002-2007, the
top 1 percent captured two thirds of income growth. Those results may help
explain the disconnect between the economic experiences of the public and
the solid macroeconomic growth posted by the U.S. economy from 2002 to
2007.
Those results may also help explain why the dramatic growth in top
incomes during the Clinton administration did not generate much public outcry
while there has been a great level of attention to top incomes in the press and
in the public debate since 2005.
During both recessions, the top 1 percent incomes fell sharply, by
30.8% from 2000 to 2002, and by 36.3% from 2007 to 2009. The primary
driver of the fall in top incomes during those recessions is the stock market
crash which reduces dramatically realized capital gains, and, especially in the
2000-2002 period, the value of executive stock-options. However, bottom 99
percent incomes fell by 11.6% from 2007 to 2009 while they fell only by 6.5
percent from 2000 to 2002.
Therefore, the top 1 percent absorbed a larger
fraction of losses in the 2000-2002 recession (57%) than in the Great
recession (49%). The 11.6 percent fall in bottom 99 percent incomes is the largest fall on record in any two year period since the Great Depression of
1929-1933.
From 2009 to 2010, average real income per family grew by 2.3%
(Table 1) but the gains were very uneven. Top 1% incomes grew by 11.6%
while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured
93% of the income gains in the first year of recovery.2 Such an uneven
recovery can possibly explain the recent public demonstrations against
inequality.
much more:
http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf
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