US income gap reaches its widest point since the 1920s

By Paul Wiseman, Associated Press

WASHINGTON — The gulf between the richest 1 percent and the rest of America is the widest it's been since the Roaring '20s.

The very wealthiest Americans earned more than 19 percent of the country's household income last year — their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.

U.S. income inequality has been growing for almost three decades. And it grew again last year, according to an analysis of Internal Revenue Service figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of them, Berkeley's Emmanuel Saez, said the incomes of the richest Americans surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.

In 2012, the incomes of the top 1 percent rose nearly 20 percent compared with a 1 percent increase for the remaining 99 percent.

The richest Americans were hit hard by the financial crisis. Their incomes fell more than 36 percent in the Great Recession of 2007-09 as stock prices plummeted. Incomes for the bottom 99 percent fell just 11.6 percent, according to the analysis.

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

The top 1 percent of American households had pretax income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.

The gap between rich and poor narrowed after World War II as unions negotiated better pay and benefits and as the government enacted a minimum wage and other policies to help the poor and middle class.

The top 1 percent's share of income bottomed out at 7.7 percent in 1973 and has risen steadily since the early 1980s, according to the analysis.

Economists point to several reasons for widening income inequality. In some industries, U.S. workers now compete with low-wage labor in China and other developing countries. Clerical and call-center jobs have been outsourced to countries such as India and the Philippines.

Increasingly, technology is replacing workers in performing routine tasks. And union power has dwindled. The percentage of American workers represented by unions has dropped from 23.3 percent in 1983 to 12.5 percent last year, according to the Labor Department.

The changes have reduced costs for many employers. That is one reason corporate profits hit a record this year as a share of U.S. economic output, even though economic growth is sluggish and unemployment remains at a high 7.2 percent.

America's top earners tend to be highly paid executives or entrepreneurs — the "working rich" — instead of elites who enjoy lives of leisure on inherited wealth, Saez wrote in a report that accompanied the new analysis.

Still, he added: "We need to decide as a society whether this increase in income inequality is efficient and acceptable."

Suck that lazy democrats!

acceptable..?? what are we gonna do, limit how much money someone can make..?? 😕

Taxes dummy!

The problem is it is highly efficient thus making it not acceptable to the inefficient. Maybe a productivity tax is in order.

what happens when the 1% decide they've been taxed enough and can live on what they have and close up shop..??

What happened in Greece?

🤔
Has been awhile but this Sandy chick turned slutty so she could hang with John Travolta and his friends... she was from outta town and stuff.... 😟

Who is John Galt?

Wait for it........

How is that hope and change working out for you?


How do I know you are an idiot? You Obama sticker on your bumper is a dead give away.

Didn't that Galt dude play for the Raiders?

I saw a strange sight last week when I was in NW NC. A car pulled into the Walmart parking lot with an Obama/Binden sticker (rare to see around there), along with a "War is not the answer" sticker. When he got out of his car, I said "It looks like your boy thinks war IS the answer". He gave me a dirty look, and walked away mumbling under his breath.

Did you key his car real good..?? 😕

[-x

Should not do that to the mentally challenged.

No problem. He has Russian dictator Vlad Poontang to mentor him.