U.S. Income Inequality Hits Nearly Record Levels
MIAMI (CBSMiami) – Americans are working harder and are producing more than at almost any time in recent history. But, the wealth gap between the richest one percent in the United States and the bottom 99 percent has grown to a point not seen since the early 20th century.
According to a new study from economists at the University of California-Berkeley, the Paris School of Economics, and Oxford University, from 2009-2012, average real income per family grew modestly by 6 percent.
However, the distribution of those gains was greatly tilted towards the richest one percent. According to the study, top one percent incomes grew by 31.4 percent while the other 99 percent saw incomes grow by just 0.4 percent from 2009-2012.
The economists defined the top 1 percent as families with incomes above $394,000 in 2012.
Overall, coming out of the Great Recession, researchers found that any loss to the top one percent would be temporary and would not change the income distribution. “The top decile income share in 2012 is equal to 50.4 %, the highest ever since 1917 when the series start,” researchers wrote.
Economists found that based on historical trends, there won’t likely be any decline in income concentration without major regulation and policy changes like the ones that took place after the Great Depression.
Researchers said that based on the policy changes coming out of the Great Recession, “it seems unlikely that U.S. income concentration will fall much in the coming years.”
The study reported that “top 1 percent incomes captured just over two-thirds of the overall economic growth of real incomes per family over the period 1993-2012.” In addition, “the top 1% captured 95% of the income gains in the first two years of the recovery.”
Overall, the researchers wrote that part of the problem has been the labor market, which has been “creating much more inequality over the last thirty years, with the very top earners capturing a large fraction of macroeconomic productivity gains.”
Researchers pegged several other causes of the rapidly growing income inequality including, “technological changes…retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.”
The study ended with this statement, “We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.”