In This Recovery, the Rich Get Richer

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Since 2009, income growth among the majority of Americans has remained relatively stagnant. But an updated version of economist Emmanuel Saez’s study, “Striking it Richer,” shows that this is not true for the top one percent of Americans.

The study found that since the recovery began in 2009, while the bottom 99 percent of Americans’ incomes have fallen by 0.4 percent since the recovery began in 2009, the top one percent’s incomes have risen by 11.2 percent. So the recovery is only truly a recovery for the wealthiest Americans.

Since the 1970s, the wealthiest one percent increasingly have earned a larger and larger share of America’s income. The recession in the early 2000s and the “Great Recession” starting in 2007 decreased their earnings, but — as the chart below shows — the top one percent still earned more than the next four percent of income earners combined. And since the recovery began in 2009, the top one percent’s incomes have bounced back more than that of any other percentile.

Credit: John Light/, data from “Striking it Richer” by Emmanuel Saez (January 23, 2013)

“The labor market has been creating much more inequality over the last thirty years, with the very top earners capturing a large fraction of macroeconomic productivity gains,” writes Saez, an economist at the University of California, Berkeley. He received the John Bates Clark Medal — an award similar to the Nobel Prize given for economics — in part for his research on income inequality with Thomas Piketty, an economist at the Paris School of Economics.

Top 1 percent of incomes, real growthBottom 99 percent of incomes, real growth
Clinton Expansion
(1993 – 2000)
2001 Recession
Bush Expansion
Great Recession

Income inequality falls during recessions, but typically bounces strongly back again. After the Great Depression and during World War II, Saez writes, a number of factors kept income concentration from growing, “such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits and changing social norms regarding pay equality.” But this time, the same factors aren’t in place.

Saez writes, “The policy changes that are taking place coming out of the Great Recession (financial regulation and top tax rate increase in 2013) are not negligible but they are modest relative to the policy changes that took place coming out of the Great Depression. Therefore, it seems unlikely that U.S. income concentration will fall much in the coming years.

“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.”

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  • Michael McLaughlin

    Do you know what the CFR is?

  • Anonymous

    Wow. Might make you think they did the whole thing on purpose.

  • Anonymous

    When government and industry collude.

  • Ayesdi F’desay

    Almost makes you feel like you’re under attack.

  • No Tea

    It’s called Class Warfare. But we didn’t start it.

  • No Tea

    Uncle Sam need YOU! To fight in the Class War of the rich against the rest.

  • David Duffy

    I was surprised to read Paul Krugman’s column recently where he seemed to not be certain whether our nation’s income disparity played a part in the economic malaise. To me, it seems obvious that it goes to the heart of our problems and will erode our economy in an ever increasing downward spiral if it’s not addressed.

  • R N Carter

    Hmm. Tell us again who the “Makers and Takers” are?

  • Anonymous

    Guess it’s not a “recovery” then, is it?

  • Russ

    George Carlin was right.

  • lifeamongtheordinary

    How and why did we let it happen again? What threats are posed by increased military spending or a fall in union membership? Why are an emphasis on individual initiative in concert with a deregulated business environment, and specifically financial deregulation, particularly hazardous to economic equality?


  • Dave Morgan

    The eruption of an entire class of billionaires was possible only by them NOT PAYING ANYTHING NEAR ENOUGH TAXES. FAIRNESS BE DAMNED, IT’S NOT ENOUGH PERIOD. You cannot drive to work with the gas that fits in an eyedropper. Americans have been so distracted by television, they not only don’t know what’s real anymore, they won’t wake up until they can’t afford their cable bills.

  • NotaGOPer

    Greed got us into this Depression and the Greed continues as we crawl out of this Depression.

  • Old Liberal

    If you multiply out the gains and losses in real income growth, the top 1% had their incomes grow by 57% over the entire period shown in the table, while the bottom 99% had their incomes grow by 5.7%. So incomes of the already wealthy grew literally 10 times as fast.

  • Mikeguru

    I have stock, as one of the 20% wealthiest who own 92% of ALL stock on Wall Street.
    While the bottom 80% own about 8% of all Stock (you have to make enough money
    above paying for housing, food, and transportation to have enough left over to
    buy a share of stock). Wage Suppression for 30 years has lessened the 80% from
    buying stock or save money).

    I read annual reports of Corporations and noticed that the Executive Compensation
    listed in the Corporations annual report did Not match what other sources like
    Forbes and Fortune listed. Only the CEO and Five Executive Vice Presidents were
    listed by law but the Corporation had 1% of the Company under the same
    standard, paid 90% annually with Stock Awards and Options that they
    “cashed in for greenbacks” as soon as the 15% tax rate qualified for
    the stock sale.

    I will give you an example.

    IBM listed their CEO as having $2 million in Salary in their annual report to
    shareholders. However, Forbes and Fortune listed the CEO at $20 million. So
    where was the $18 million coming from? I tried to figure out in the Annual
    Report, where the $18 million was being paid to the CEO. It was not apparent
    except for “Stock Awards and Stock Options” with no “cash value” estimated.

    The CEO and the 1% of the total employee workforce (Executives) were being paid 90% in Stock, taxed at 15%. Only $2 million was paid and taxed at Ordinary Income. The Stock Compensation applied to the 1% of the Company or 4,000 Executives at IBM.

    A typical Corporate Executive would Sell the Stock under the guise of
    “Capital Gains” and receive the Special Treatment of a 15% Tax Rate.
    I think this “Trick” of paying in stock to the 1% of all major
    Corporations started around 1980.

    Over the years, I noticed that employees of Companies, the 99%, were Not receiving
    increases in compensation matching Productivity improvements with their hours
    increasing and benefits grew less and less. In fact, over 30 years the increase
    of employees not paid with Stock Awards was a measily 3% compared to 400% of
    Corporate Executives. The Corporate Board of Directors(who are the Executives
    tools) were using Cash from Profit to “:Buy Back Shares of Stock”
    that resulted in “Boosting the Stock Share Price, artificially” that
    would not have occurred had the Executives not being paid 90% in stock.

    Recently I read a book, that listed the Richest Point 1% of the USA. About
    140,000 Households. About 49% of those Richest 140,000 Households are Former
    and Current Corporate Executives. The figure varies from 35% to 49% depending.
    However, it is apparent, Paying Executives in Stock, taxed at 15% made
    Corporate Executives very, very, wealthy while 99% were carrying the taxation
    load taxed at 39% ordinary income rates for the Country, not only with Revenue,
    but with their kids as the Corporate Executives kids escaped Military Service
    with no mandatory Military Service for all. (As a Veteran, the “Thanks for
    your Service comment from a Corporate Executive is insulting as his kids, never
    serve, only the Middle Class and Poor”.

    The next highest of the 140,000 wealthiest households were 19% Financial – Wall Street
    and Hedge Fund Managers, again – paid in Stock taxed at 15%.

    I chuckle when I hear “We are making this buyback, not giving employees
    raises” to “return value to Shareholders” at the Corporate
    Boards reports at Annual meetings (they loath to hold public meetings) where
    the “Shareholders they are speaking of are Them, the 1% Executives, the
    managers paid 90% at a 15% tax rate”.

    Another fact is the employees are “Contributing to their 401K” taxed at 39%
    when withdrawn and at least 75% are being poured into Stock that the 1%
    Corporate Executives “sell for Cash” taxed at 15% every year.

    With the “Hyper Computer buy and sell every “microsecond” and no
    Transaction fee, Wall Street, Corporate Executives, and the Wealthy are
    “skimming the 401K and IRA;s” of employees and retirees every year
    and also benefit from 15% tax rates while returns overall a decade are
    “lost” (the Recent returns can be “washed away” in a few
    days with a “pull the trigger” of those “in the Know”.

    The Billions paid to Wall Street firms like Goldman Sachs are with schemes like
    “hyper Stock Trading” and with Compensation being taxed at 15%.

    As Leona Helmsly stated “Only the Little People pay Taxes”.

    So, Lookno further than Washington, DC for how the Wealth Disparity
    happened. Wall Street (paid at a 15% tax rate), Corporate Executives (paid at a
    15% tax rate) and the “Investment in Bribery from Lobbyists from Wall
    Street and Corporations” pulled off the greatest “Financial
    Coup” in the history of the World that caused this disparity of wealth.
    Check out the disclosure of long term US Senators, stock investments on .

    How do we fix it? It is certainly Not keeping this Corporate “Compensation
    Loophole” in place of Corporate Executives and the “the Loophole
    Scheme of being paid in Stock taxed at 15% must be addressed” and the
    Republicans are Not the solution, they are enablers of this huge tax revenue
    loss to run the country unless, of course, they are pressured by the 99% who
    pay taxes at ordinary income rates of 39% and more.

    Remember, just becasue you have a 401K that is comprised of Stock, when you
    cash in the 401K the tax rate is 39%, Not 15%.

    Our Country is in trouble tax wise from the shift of paying Corporate Executives
    and Wall Street Bankers with the “Pseudo Cash of Stock” taxed at 15%.
    This “Loophole” needs to be plugged.

    THINK about it.

  • zane

    Nice idea if we hadn’t set it up so that only a fraction of society had the power to dictate the outcome.

  • Donna G

    That’s a definition of Fascism

  • Brian Schatz

    I prefer the workaround to capitalism. Worker Self Directed Enterprises – as in Cooperatives. Your guest previous to these was Dr Richard D Wolff: he gets it completely. You cannot fix concentrated wealth within capitalism because the capitalists have all that excess cash to buy off politicians where getting their way is only a matter of time.

  • Socialmedic

    They did it on purpose by not letting anybody talk about class warfare.

  • hkelley

    Well played, rich people, well played.

  • Pat Elgee

    Corruption on the Hill is the problem. Laws allow the rich to rip off those with less. Bain Capital is an example. Some business do have to be closed if they operate in the red, but the pensions for which the employees worked all their lives, should be protected, not raided.

    It is bad enough that the workers are left unemployed, but they still should have what they put into their pensions as well as the matching funds. Pensions should be protected by law and backed by the FDIC, the same as bank savings accounts.

    People like Romney who left thousands unemployed and without their pensions should never have walked away with $12 million in his pocket. In fact, he should be forced to return the pensions to the people he robbed.

    The first I ever heard of this was from a man who married my cousin. He worked for the airlines and had a nice pension, then the airlines were bought out by another, and his pension was seized. This is wrong!

    Nevertheless, companies like Bain Capital can buy congressmen, tell they what laws to pass, and even have the audacity to run one of their robberbarons for President. Personally I think that Romney should have to return what he stole and then belongs in prison–certainly not in the White House.