Top income earners. “In Colonial America, the rich were getting richer and the poor were getting much poorer. In 1687 in Boston, the top-1% owned about 25% of the wealth. By 1770, the top-1% owned 44%. In those same years, the poor–those who owned no property–represented 14% in 1687 and 29% in 1770″
Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000. In the past 20 years, the U.S. economy has grown nearly 60 percent. This huge increase in productivity is partly due to automation, the internet, and other improvements in efficiency. But it’s also the result of Americans working harder; often without a big boost to their bottom lines. Meanwhile, corporate profits are up 20%.
For Americans as a whole, the length of a typical workweek hasn’t changed much in years. But for many middle-class workers, job obligations are creeping into free time and family time. For low-income workers, hours have declined due to a shrinking job market, causing underemployment.
Recently there has been much national attention on the vast majority of Americans who have been left behind by the economic growth of the past few decades; the 99%, but who exactly is the 1%? A quick look at the numbers reveals that they aren’t all bailed-out Wall Street executives or brokers pulling down fat bonuses: That’s just some of them.
In the article “Who are the One Percent?” by Suzy Khimm writes: Taken literally, the top-1% of American households had a minimum income of $516,633 in 2010; a figure that includes wages, government transfers and money from capital gains, dividends and other investment income. That number is down from peak of $646,195 in 2007, before the economic crisis hit, all adjusted to 2011 dollars, according to calculations by the ‘Tax Policy Center’. By contrast, the bottom 60% earned a maximum of $59,154 in 2010, the bottom 40% earned a maximum of $33,870, while the bottom 20% earned just $16,961 at maximum.
As Annie Lowrey points out, that gap has grown wider over time: “The top 1% of households took a bigger share of overall income in 2007 than they did at any time since 1928.” When you look at the disparity in net worth, things look even more skewed. Wealthier Americans have assets — in home equity, stocks and other investments — that generally outstrip their cash income. Average wealth of the top-1% was almost $14 million in 2009, according to a 2011 report from the ‘Economic Policy Institute (EPI)’. That’s down from a peak of $19.2 million in 2007.
By contrast, the poorest households were experiencing declines in net worth even before the recession hit. In 2007, the bottom 20% of households had an average (negative!) net worth of –$13,800 in 2007, which fell further to –$27,200 in 2009. Altogether, “average wealth of the bottom 80% was just $62,900 in 2009; a dropoff of $40,900 from 2007”, EPI writes. That means the wealthiest 1% held an average of 225 times the wealth of the average median household in 2009; a ratio that was 125 in 1962…
In the article “Who Are The One Percent Protesters So Despise?” by Claire Gordon writes: The ‘One Percent’ is the villain of the moment, but it’s a mostly faceless one. We can imagine Bernie Madoff, Rupert Murdoch, those guys from Enron, and a smattering of Goldman Sachs execs sitting around a mahogany table smoking cigars and flipping ash on your mortgage papers. But really, it’s hard to know who the protesters are talking about, and it’s hard to understand their crimes.
As Matt Taibbi writes in Rolling Stone magazine, manipulating the markets, the government, and the regulatory structure ‘simply can’t be seen by the public or put on TV’. So who are the ‘One Percent’, and where did they come from? In 1915, statistician Willford I. King noted with concern that the richest 1% of Americans took home 15% of the nation’s income.
As Timothy Noah writes in his series on ‘inequality’ for Slate, the country soon introduced the modern income tax: Income distribution became profoundly more equal during the “Great Compression” of the ’40s, ’50s, and ’60s. But today, the top-1% take home a record 24% of the nation’s income, almost triple the percentage in 1976.
The top-0.1% takes home 7.7%. Noah has dubbed the last three decades the “Great Divergence.” You’d be in the top-1% of U.S. households if your income in 2010 was at least $516,633 as calculated by the Washington Post‘s ‘Wonkblog’. Numbers from the IRS — based on 2009 tax returns — show what it took to be among the top-1% of income earners: adjusted gross income of $343,927 or more.
The 1.4 million Americans with this elite status reported 16.9% of all the country’s taxable income. But this same group also kicked in 37% of all the taxes paid. How much did you need to make to be in the top-50% of earners? — Just $32,396.
According to a paper by Jon Bakija, Adam Cole and Bradley T. Heim, almost one third of ‘1-Percenters’ are executives, managers, and supervisors not in the financial sector. Another 15.7% of members of that 1% work in the medical field and financial and they make up 13.9% of the top-1%. Those in the computer, engineering and technical sectors make up a comfortable 4.6% of that top fraction of earners, followed by the retired and deceased. (Elvis is the highest earning person not alive.) Only (only?) 29 of the 100 richest people in America, as compiled by Forbes magazine, earned their staggering wealth through finance.
Many of the country’s richest became that way through creating something of great value to a lot of people. As Noah notes, finance saw its share of corporate profits rise from less than 10% in 1979 to over 40% in the past decade. He concludes that the upward distribution of income is the result of; the decline of organized labor, a dysfunctional educational system, and yes, the abusive exercise of power of the ultra-rich.
In a recent study, a sample of Americans were presented with three imaginary countries, and asked which one they would prefer to live-in: Country ‘A’ had completely equal distribution of income; the top 20% possessed 20% of the nation’s wealth. In Country ‘B’; the top 20% owned 35% of the wealth, and in Country ‘C’; the top 20% had 80% of the wealth. Ninety-two percent of Americans chose Country ‘B’, with political affiliation making almost no difference. More people chose Country ‘A’ (which does not exist) than Country ‘C’. Country ‘B’ is Sweden. Country ‘C’ is the United States.
In an article by Joseph E. Stiglitz, he writes: In recent months we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt, Libya and Tunisia. Protests have erupted in Syria, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next? They are right to worry.
These are societies where a minuscule fraction of the population—less than 1%—controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general. As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America?
In important ways, our own country has become like one of these distant, troubled places. Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood”. The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different.
It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism.
Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business. The top-1% have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99% live. Throughout history, this is something that the top-1% eventually do learn: Too late.
“The most commonly used measure of inequality is the ‘Gini’-coefficient, The coefficient varies between ‘0’, which reflects complete equality and ‘1’, which indicates complete inequality (one person has all the income or consumption, all others have none).
The world’s most advanced economies based on their ‘Gini’ score are: Scandinavian countries, Japan, and the Czech Republic have the least amount of inequality. The U.S. is among the most unequal. Top 11 countries with the biggest gaps between rich and poor: No.1-Hong Kong, No.2-Singapore, No.3-U.S., No.4-Israel, No.5-Portugal, No.6-New Zealand, No.7-(tie) Italy, No.7-(tie) Britain, No.9-Australia, No.10-(tie) Ireland, No.10 (tie)-Greece.”