Top 1% Captured 93% of the Income Gains in the First Year of Recovery

One of the world’s foremost income inequality researchers, Emmanuel Saez, has found the top 1 percent captured 93% of the income gains in the first full year of recovery, 2010!

Real income growth by groups 1993-2010The above table depicts real income growth by groups, 1993 to 2010. There’s a lot of information in this table. The top 1 percent income group enjoyed incredible growth in both the Clinton and Bush expansion eras, 98.7 percent and 61.8 percent respectively. Real income growth associated with the bottom 99 percent was 20.3 percent under Clinton but only 6.8 percent for the Bush expansionary period. Saez suggests this may be a reason Americans were not as concerned with income inequality under Clinton compared to Bush. All income groups were hurt by the two recessions, highlighted in red, with the top 1 percent experiencing the greatest losses during the recession, but making up their losses during the recovery by capturing 93 percent of income gains during 2010 (highlighted in yellow).

The following figure depicts top decile share of income, 1917-2010, with and without capital gains. Top decile share 1917-2010The top 10 percent captured 47 percent of income, including capital gains in 2010.

With regard to trends in 2011 Saez says,

“It is likely that this uneven recovery has continued in 2011 as the stock market has continued to recover. National Accounts statistics show that corporate profits and dividends distributed have grown strongly in 2011 while wage and salary accruals have only grown only modestly. Unemployment and non-employment have remained high in 2011. This suggests that the Great Recession will only depress top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.”

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Reference

Saez, Emmanuel. (2012). Striking it Richer: The Evolution of Top Incomes in the United States. (Updated with 2009 and 2010 estimates). http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf

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