Monday, March 5, 2012

They're Back!

 Mike Konczal at Rortybomb:
The top 1% had a rough Great Recession.  They absorbed 50% of the income losses, and their share of income dropped from 23.5% to 18.1% percent (in 2009.)  Is this a new state of affairs, or would the 1% bounce back in 2010?

Well we finally have the estimated data for 2010 by income percentile, and it turns out that the top 1%  had a fantastic year.  The data is in the World Top Income Database, as well as Emmanuel Saez's updated Striking it Richer: The Evolution of Top Incomes in the United States ...
The takeaway quote from Saez should be: "The top 1% captured 93% of the income gains in the first year of recovery."
...(L)et's get some absolute numbers here.  Here is income by important percentiles, as well as the change from 2009-2010.  I include the change with and without capital gains, to make sure we understand that this is a phenomenon both in and independent of a strong stock market:
The bottom 90% of Americans lost $127, the bottom 99% of Americans gained $80, and the top 1% gained $105,637.  The bottom 99% is net positive for the year because of around $125 in average capital gains.  They can take comfort in efforts by the Right to set the capital gains tax to 0%, which would have netted them an addition couple dozen bucks...
The Great Recession dropped income for the bottom 99% by 11.6%, completely wiping out the meager gains of the Bush years.  And crucially, while 2010 was a year of continued stagnation for the economy as a whole, the 1% began to show strong gains, even when you exclude capital gains...
It's also worth mentioning that, Pre-Recession, inequality hasn't been this high since the Great Depression, and we are looking to rapidly return to that state.  It's important to remember that a series of choices were made during the New Deal to react to runaway inequality, including changes to progressive taxation, financial regulation, monetary policy, labor unionization, and guaranteed social insurance.  A battle will be fought over the next decade - it's been fought for the past three years - on all these fronts, and the subsequent resolution will determine how broadly-shared prosperity is going forward and whether or economy will continue to be as unstable as it has been.

1 comment:

  1. I think it was JP Morgan who said, "Boom times are good, but bust times are great!"