Income gains for 1% break records: U.S. income inequality reached its highest level since 1928 - A new economic study reveals income inequality between the wealthiest Americans and the rest of the population continues to increase. The incomes of the richest 1% rose by 20 percent last year, while the remaining 99% experienced only a 1% increase. Since the economic recovery began in 2009, over 95% of all income gains have gone to the top 1%, while ordinary Americans have seen their incomes stagnate.
“With so much of the country’s wealth concentrated in the hands of a small number of wealthy individuals, it is harder than ever for ordinary Americans to save for retirement,” said Edward F. Coyle, Executive Director of the Alliance for Retired Americans. “Yet House Budget Committee Chairman Paul Ryan and his allies continue to insist that we need to further cut taxes for the rich, while slashing Social Security, Medicare, and Medicaid benefits. They are flat-out wrong; it is time for the wealthiest Americans to contribute their fair share to ensure a secure retirement for all.”forced many older workers to retire early with very reduced Social Social Security benefits. The Affordable Care Act’s insurance exchanges, set to open this October, are expected to make health insurance less costly and easier to obtain for early retirees. Currently, many Americans who retire before 65 and are no longer insured through their employers find it extremely difficult to obtain health insurance.
From The Rich Man's Recovery by Paul Krugman:
Economists Thomas Piketty and Emmanuel Saez used IRS numbers to estimate the concentration of income in America’s upper strata. According to their estimates, top income shares took a hit during the Great Recession, as things like capital gains and Wall Street bonuses temporarily dried up. But the rich have come roaring back, to such an extent that 95 percent of the gains from economic recovery since 2009 have gone to the famous 1 percent. In fact, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.
Basically, while the great majority of Americans are still living in a depressed economy, the rich have recovered just about all their losses and are powering ahead.
An aside: These numbers should (but probably won’t) finally kill claims that rising inequality is all about the highly educated doing better than those with less training. Only a small fraction of college graduates make it into the charmed circle of the 1 percent. Meanwhile, many, even most, highly educated young people are having a very rough time. They have their degrees, often acquired at the cost of heavy debts, but many remain unemployed or underemployed, while many more find that they are employed in jobs that make no use of their expensive educations. The college graduate serving lattes at Starbucks is a cliché, but he reflects a very real situation.
What’s driving these huge income gains at the top? There’s intense debate on that point, with some economists still claiming that incredibly high incomes reflect comparably incredible contributions to the economy. I’d note that a large proportion of those superhigh incomes come from the financial industry, which is, as you may remember, the industry that taxpayers had to bail out after its looming collapse threatened to take down the whole economy.
In any case, however, whatever is causing the growing concentration of income at the top, the effect of that concentration is to undermine all the values that define America. Year by year, we’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy.
So what can be done? For the moment, the kind of transformation that took place under the New Deal — a transformation that created a middle-class society, not just through government programs, but by greatly increasing workers’ bargaining power — seems politically out of reach. But that doesn’t mean we should give up on smaller steps, initiatives that do at least a bit to level the playing field.
Take, for example, the proposal by Bill de Blasio, who finished in first place in Tuesday’s Democratic primary and is the probable next mayor of New York, to provide universal prekindergarten education, paid for with a small tax surcharge on those with incomes over $500,000. The usual suspects are, of course, screaming and talking about their hurt feelings; they’ve been doing a lot of that these past few years, even while making out like bandits. But surely this is exactly the sort of thing we should be doing: Taxing the ever-richer rich, at least a bit, to expand opportunity for the children of the less fortunate.
Some pundits are already suggesting that Mr. de Blasio’s unexpected rise is the leading edge of a new economic populism that will shake up our whole political system. That seems premature, but I hope they’re right. For extreme inequality is still on the rise — and it’s poisoning our society.
From the Huff Po: The Totally Unfair And Bitterly Uneven 'Recovery
The GOP is also getting more of what they want with budget cuts. Sequestration would mean moving resources away from white-collar business fraud, since national security and cyberthreats are more of a priority. (Editor's Note: I suppose this would be equally true for the IRS, with budget cuts to keep them from auditing wealthy tax cheats who have offshore bank accounts and dummy corporations)
It is not particularly shocking that corporate profits and stock-price gains have mostly benefited the wealthiest Americans. But this recovery appears to be less fair than other recoveries going back to the Depression --- and it has not brought in new policies aimed at equality. If anything, we are getting right back to the pre-crisis business of letting the rich get richer and the poor get poorer.
For example, CEO pay snapped back sharply after the crisis as the pay of the highest earners has far outpaced the rest of us. Also, the banks' profits are back to record highs. In fact, the biggest banks are even bigger than before the crisis.
Soaring stocks and profits have widened the gap between the haves and the have-nots. It might help if the labor market were better, but this has been the slowest job recovery since World War II. And most of the jobs created have been low-paying. In fact, the low-paying sectors of food service, retail and temporary help have accounted for more than 40 percent of all the job growth.
The recovery has also been uneven geographically, with only 13 states so far seeing unemployment get back to pre-recession levels.
Also, in addition to the current farm bill being proposed by the GOP for cutting food stamps, Rep. Phil Roe (R-Tenn.) on Tuesday proposed new legislation that would also require people using food stamps to buy only "healthy" food. (Why not just force poor people to only buy whole wheat bread? They can drink tap water.) It appears that the Republicans prefer soup kitchens and breadlines.