Colin Gordon of the Iowa Policy Project has taken recently-released 2012 figures on the incomes of the top 1% and the rest of us and put the new information in historical perspective. Using national figures, he makes three points.
First, in the recovery from 2009-12, the income of the top 1% in the United States more than made up the ground lost from 2007-09. In fact, the rebound in incomes — an increase of 31.4% — following the earlier fall — of 16.3% — left top 1% income higher than the 2007 starting point. For the top 10%, the increase in income since 2009 made up the ground lost from 2007-09 plus a little bit. For the bottom 90%, incomes have continued to decline even in the recovery — and are now 15% below the 2007 level.
Second, after two years (2007 to 2009) of a falling tide lowering all boats, the last three years witnessed a quick return to the 35-year trend of “growing apart.” Growing apart contrasts very sharply to the three previous decades of “growing together.” The risk as this growing apart trend continues is that the 1940s to 1970s will come to be seen as the exceptional period. Progressives must fight tooth and nail in the next decade to prevent acquiescence to this possibility.
Third, the United States is now right at the highest level of inequality in its history — just a fraction (measured by top 1% and top 0.01% shares of income) below the pre-1930 peaks. One more year like 2012, and we can all have “America’s Most Gilded Age” parties. Not good.
Not good for upward mobility and the American Dream. Not good for a democracy already too subservient to rich people. Not good for our economic growth — inequality is negatively correlated with growth across countries, partly because countries with high inequality can’t get the rich folks to pay enough in taxes to invest in education for the many, in infrastructure, in research and development, etc.
Also not very new.
But we’re going to keep reminding you until something is done about it.