Wealthiest Americans Take Home Biggest Share of Income Ever Recorded

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This post first appeared at ThinkProgress.


A man counts one hundred dollar bills. (AP Photo/Tsering Topgyal)

(AP Photo/Tsering Topgyal)

The top 10 percent of earners in the United States took home more than 50 percent of all income in 2012, the highest amount ever recorded since data was first collected in 1917, according to an updated report from economists Emmanuel Saez and Thomas Piketty.

While the wealthiest took a big hit during the financial crisis, they’ve almost fully recovered. Last year, income for the top 1 percent of earners “increased sharply,” the report notes, growing by nearly 20 percent, while the bottom 99 percent only saw money rise by 1 percent. “In sum,” the authors write, “top 1 percent incomes are close to full recovery while bottom 99 percent incomes have hardly started to recover.”

This follows a trend since the recovery officially began. From 2009 to 2012, income for the 1 percent grew by 31.4 percent, while everyone else only saw it grow by 0.4 percent. That means the 1 percent “captured 95 percent of the income gains in the first three years of the recovery,” they write.

The authors point out that rather than the Great Recession helping to mitigate income inequality, which has skyrocketed since the 1970s, it only temporarily disrupted a trend that is now continuing. And policy isn’t helping. Given that recessions only have a temporary impact on top earners “unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back,” the United States would have to aggressively implement changes that could reverse the trend. That’s what happened after the Great Depression, when the New Deal was enacted. But the response to the Great Recession, which mostly amounted to the Dodd-Frank financial reform bill and an increase in the top tax rate, “are modest relative to the policy changes that took place coming out of the Great Depression,” they write. It’s unlikely they will make any lasting change.

The U.S. suffers from particularly drastic income inequality. It is worse here than in Egypt, Tunisia, Yemen, the Ivory Coast, Pakistan, and Ethiopia. It’s a trend that began in the 1970s and has continued: Through the 2000s, the richest 20 percent of Americans saw their incomes grow by $2,550, while the bottom 20 percent just saw $1,330 in growth. The top 10 percent now has 15.9 times the income of the bottom.

And U.S. policy is mostly to blame. The deregulation of Wall Street meant huge profits in the sector, attracting the 1 percent, whose incomes then took off from everyone else’s. Changes in the tax code for capital gains income, or money made through investment rather than salaries, is one of the largest factors. While the social safety net has helped keep the gap smaller than it otherwise would be, the U.S. has been cutting back drastically on social spending. We’re set to cut $1.5 trillion in spending over the next decade.


Bryce CovertBryce Covert is the economic policy editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. Follow her on Twitter at @brycecovert.
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  • Anonymous

    We need a new party to outline exactly what needs to be fixed and how to fix it. Like passing Sen. Warrens bill to control Wall Street, and her other one to allow students to borrow at the same rate as big banks. We need to get out of the Corporate Wars for Profit. We need to sink money into alternative energy, put NASA on developing smaller units for individual homes. We need to restore the Prosperity of the People, jobs,
    education, homes, clean food minus the Round Up. It just can’t be a Green Party, because just the term makes people dismiss it.

  • Gene Conway

    The wealthy have learned to survive on money and will not be able to survive without it, but those who have learned to survive without it, will thrive in their absence.

  • Anonymous

    Did this site seriously just delete my previous comment? Where I merely pointed out that it is a basic economic fact that wealth is not a “zero-sum” game… and pointed to a resource for teachers to teach this basic econ principle to children?

    Correcting a fundamental flaw in article author’s understanding of basic economics is an offense that requires censoring? Interesting…

  • John

    Zero sum thinkers are people that throw around the multiplier effect, not understanding that the multiplier effect is an example why there is no zero sum. And with regulation and taxation rules, companies and the wealthy aren’t free to spend money as they like, and as quickly, people aren’t able to simply start a project, but must wait for the blessing of government on when, why and how it may be spent, the “sum” tends to remain with those that have it, until they are able to spend it, rather than being put immediately back into the pool for the lower classes to take their share. Further, paying taxes and then waiting for a return decreases the multiplier and the available “sum”, while the more money that goes into taxation means that less money is in the “sum” altogether for the taking.

    There is no zero sum, but there is a heavily controlled and regulated sum that favors that rich, because that’s how government naturally works.

  • John

    The idea that there is not enough regulation to direct the money to the poor is absolutely preposterous.

    It is precisely because there is too much regulation and control that only those with money and lawyers can access the money most easily.

    The more we regulate, the more poverty we create. There are ~8000 new regulations added to the books every year, yet all we hear from the left is “not enough regulation!!!” Tax code gets bigger and bigger, but “not enough taxation!!!”

    Liberal thought and control is a well meaning vicious cycle of of poverty and economic destruction.

  • John

    “We’re set to cut $1.5 trillion in spending over the next decade.”

    This is a ludicrous idea. It’s like me saying that I’m going to cut my next year’s budget by cutting out the hypothetical Lamborghini I was going to buy. There was no real budget, no real Lamborghini, but by claiming I’ve cut it out of my budget, I’ve reduced [imaginary] spending by $200K!!!!!!

  • John

    ” It is worse here than in Egypt, Tunisia, Yemen, the Ivory Coast, Pakistan, and Ethiopia. ”
    Another ludicrous idea. Since there is no opportunity, mass corruption and horrible conditions in these countries, no one ones to be rich and live there, not the least of which is because you could be killed for it. So, poverty for everyone! Equality!

  • John

    One of the biggest hurdles to overcoming poverty is ZONING. I have never seen anyone on the left advocate for eliminating zoning, so that the poor can start a business freely and easily out of their own homes like they do in most every other part of the world.

  • John

    Just as they do in communist countries everywhere.

  • DavidW

    I say we fight money with money. We fight ownership with ownership. We have to figure out a way to band together and invest in our own communities to slow or possibly stop this flow of “royalty” payments to the wealthy.

    We can start by learning more about Credit Unions, Food Co-ops, Worker Co-ops, and Mutual Insurance companies. While we are doing that, move your money into a local Credit Union already.

  • Anonymous

    “Alms for the poor? Alms for the poor?” — sigh.

  • Jim Olson

    Criminal.

  • James

    That’s what you get for voting for Tea Bag or any Republican, when will you tea bags learn. You are fighting the wrong side.

  • Anonymous

    Here’s how I’m addressing the problem: decreasing spending on all unnecessary items and, as often as possible, buying from small local businesses. That means not buying a new iPhone until the old one dies, shopping at the local market instead of Safeway, not buying a new car until the old one no longer runs, etc. The only way we can affect the bottom lines of rich people’s businesses is to stop buying from them!

  • Anonymous

    Your Lamborghini example might be true if we were talking about purely discretionary spending. But I don’t think that is what we are talking about. Government agencies and budgets tend to carry over from year to year. If thosebudgets are whittled away, it is in fact a reduction in projected spending.

  • Anonymous

    Wow. That’s a lot of vitriol in one comment.

    First, the purpose of regulations is not to “direct money to the poor” as you seem to believe. I know a few people who would describe themselves as “liberal,” but I don’t know anyone who would subscribe to your regulatory theory.

    Regulations usually protect markets (SEC), worker rights (OSHA), the environment (EPA), food and drug safety (FDA), etc., etc.

    Social safety net programs and tax policy are used to “direct money to the poor” as you say. Prior to the creation of Medicare and Medicaid, the elderly and destitute often went entirely without healthcare because they couldn’t afford insurance. Prior to the creation of Social Security, 50% of the elderly lived in poverty. Currently, about 10% of the elderly live in poverty. I’d call that a fairly successful program.

    If you are going to talk about a “vicious cycle of destruction,” you should be more specific. Painting with a brush as broad as yours does not amount to constructive criticism. It is mere vandalism.

  • Anonymous

    While I would agree with you regarding the completely unruly (and inefficient) tax code, and the number of regulations in almost all facets of life is absurd. But, regulations are designed largely to distribute wealth upward not downward and one need only look at the data to see evidence of this. Also you confuse inefficient taxation with ‘not enough taxation’. Taxes need to be raised, to at a minimum, pre-bush era on the wealthiest. Who do you think is responsible for inefficient regulations? taxation that has become an entitlement system for the rich? You, with a straight face, could suggest it is only liberals?

    You shared care enough about your country to lay the blame and the responsibility on any party who has allowed the degree of inequality we have to flourish. Unless, of course, you think there’s nothing wrong with our levels of economic inequality and our lack of opportunity based on SES.

  • Anonymous

    I”m sorry, but I have to laugh. LOL. You really believe such nonsense? Why not take a few minutes and Google some of your assertions. You’re not aware of Warren Buffetts discussion of the ‘genetic lottery’? Or that educational opportunities, more than at any point in recent history, are guided by the parents SES? Unaware that the greatest predictor of economic success is ones parents SES?

  • Russell Scott Day

    It appears as a conflict without clearly personified members. Crimes were made legal. The article says “Rich” get the money and social services are cut while the armed forces expenditures are increased or maintained at levels that were incredible to begin with. That was all as aimed for at the beginning of the 70s as the Viet Nam war was ended. Of a sudden some things happened. All most turned away from it and entertainments were trended. If trends were social enhancements instead of war and theft then the rounded roadways isolating blocks from city centers would be more for the grid. Cities are for the rich to get in and out of from the airports. I am not saying just one thing, but aiming to grasp control of the trends by the financial engineers who have the money and laws at beck and call.

  • Cynthia Sheppard-Johnston

    Maybe there was simply a cyber glitch that caused your comment not to show up. Your posting is sounding a bit paranoid. Talk about conspiracy theories much.

  • Cynthia Sheppard-Johnston

    Where did you read communism in that remark?

  • Cynthia Sheppard-Johnston

    The only reason one’s parents’ SES matters is that money bought the opportunities from which one benefits — tutoring, prep school, extracurricular activities, etc.

  • Cynthia Sheppard-Johnston

    Our legislators are members of the top economic class. They CANNOT

  • John

    Communism’s goal is to rid society of wealthy people. Although, they generally mean OTHER wealthy people and not the wealthy people they become for being in charge of the poor.

  • http://www.alchemyofchange.net/ Gideon Rosenblatt

    Technology plays a critical role here, by the way. The automation crunch pushes from both ends of the income distribution curve: the way technology displaces labor, and the way it concentrates profits. The role of tech in wealth disparity is a complex issue though.

  • Anonymous

    You obviously don’t understand how technology actually works. There are no such thing as gremlins.

    Providers use a concept called redundancy – you might benefit from looking it up.

    My comment had been posted and was up for some time. It was then later removed by a moderator.

  • moderator

    Your comment ended up in the spam folder due to the fact that you used a link. This will often trigger our automated filters. Your comment should be back up. In the future if you have any questions please email us.

    Sean @ Moyers

  • Anonymous

    you’re a 100% correct Cynthia at least imho.