The top 10 percent of earners took more than half the country’s income last year, the highest level ever recorded, according to a study by economists at the University of California, Berkeley. The top 1 percent took home more than a fifth of the country’s income, one of the highest levels since 1913, when the U.S. instituted an income tax. The study found that the recovery from the recession has disproportionately benefited the wealthy, with stocks and real estate prices booming while lower wages stagnated and unemployment remained high.
"High stock prices, rising home values and surging corporate profits have buoyed the recovery-era incomes of the most affluent Americans, with the incomes of the rest still weighed down by high unemployment and stagnant wages for many blue- and white-collar workers.
“These results suggest the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s,” Mr. Saez, an economist at the University of California, Berkeley, wrote in his analysis of the data.
The income share of the top 1 percent of earners in 2012 returned to the same level as before both the Great Recession and the Great Depression: just above 20 percent, jumping to about 22.5 percent in 2012 from 19.7 percent in 2011.
That increase is probably in part due to one-time factors. Congress made a last-minute deal to avoid the expiration of all of the Bush-era tax cuts in January. That deal included a number of tax increases on wealthy Americans, including bumping up levies on investment income. Seeing the tax changes coming, many companies gave large dividends and investors cashed out."
Wealthier households have disproportionately benefited from the stock market boom during the recovery, with the Dow Jones industrial average more than doubling in value since it bottomed out early in 2009. Approximately half of households hold stock, directly or through vehicles like pension accounts. But the richest 10 percent of households own about 90 percent of the stock, thus expanding both their net worth and their incomes when they cash out or receive dividends.
Yet the economy remains depressed for most wage-earning families. With sustained, relatively high rates of unemployment, and businesses are under no pressure to raise their employees’ incomes because both workers and employers know that many people without jobs would be willing to work for less. The percentage of Americans working or looking for work is at its lowest in 35 years.
There is a glimmer of hope for the 99 percent in the report, though. Mr. Piketty and Mr. Saez show that the incomes of that group stagnated between 2009 and 2011. In 2012, they started to grow again -- if only by about 1 percent.