Smart Charts: An Economic Recovery for the 1%

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Matthew Yglesias calls this chart, from Pavlina Tcherneva, an economist at the Levy Economic Institute at Bard College, “the most important chart about the American economy you’ll see this year.” It illustrates how much income gains those at the top have enjoyed during each of our post-war expansions.

Average income growth in US recoveries: top 10% versus the bottom 90%. (Graph:  Pavlina Tcherneva)

Average income growth in US recoveries: top 10% versus the bottom 90%. (Graph: Pavlina Tcherneva)

Through the 1975-1979 expansion, more income gains went to the vast majority of the public than to the top 10 percent of households, but the opposite has been true since then. Inequality has grown with each subsequent expansion.

In the current recovery, at least through 2012, the bottom 90 percent actually lost ground, with all of the income gains being grabbed by the wealthiest 10 percent of American households. (Tcherneva relied on the oft-cited income shares database developed by economists Emmanuel Saez and Thomas Picketty.)

Tcherneva ran the numbers for the top one percent and the bottom 99 percent as well…

Average income growth in US recoveries: top 10% versus the bottom 90%. (Data: Pavlina Tcherneva; Graphic: New York Times)

Average income growth in US recoveries: top 10% versus the bottom 90%. (Data: Pavlina Tcherneva; Graphic: New York Times)

In the paper which the top chart appears in, Tcherneva argues that policymakers have increasingly approached recessions by stabilizing corporations and the broader financial system, and argues that this approach has failed to “trickle down” to the majority of working people. “Conventional fiscal fine-tuning measures ensure that when government increases its total demand for goods and services, it first improves the conditions of the skilled, employable, highly educated, and relatively highly-paid wage and salary workers,” she writes. But “this trickle-down mechanism never quite trickles down far enough to create job opportunities for all individuals willing and able to work, irrespective of their skill and education level.”

One could make a broader structural argument as well: The shift Tcherneva identifies correlates with the end of the post-World War II period of “liberal consensus,” Ronald Reagan’s election and the rise of trickle-down economics. It also correlates with corporate America’s war on organized labor; workers saw a sharp decline in clout during this period. In 1979, the year before Reagan’s election, 21.2 percent of private sector workers belonged to a union; when he left office in 1989, that number had dropped to just 12.3 percent. By the time the 2009 expansion begins, private sector union membership had fallen to 7.2 percent. Policy-making doesn’t occur in a vacuum.

Tcherneva argues for more precisely targeted, bottom-up stimulus policies that would encourage full employment, instead of merely addressing gaps in consumer demand. (For more on that, see Dean Baker’s piece, “The Full Employment Route to Poverty Reduction.”)

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Joshua Holland is a senior digital producer for He’s the author of The Fifteen Biggest Lies About the Economy (and Everything Else the Right Doesn’t Want You to Know about Taxes, Jobs and Corporate America) (Wiley: 2010), and host of Politics and Reality Radio. Follow him on Twitter or drop him an email at hollandj [at] moyersmedia [dot] com.
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  • LEK56

    One can clearly see when corporations figured out how to buy politicians. But we voted them in, didn’t we? And we still are. If you think it’s bad now, just wait till after this November.

  • Anonymous

    What happened from 73 to 75 and 79 to 82? There is a gap in both cases. A minor flaw but flaws cause suspicion.

    Otherwise about what I expected. Everyone looking for the conspiracy in stupid places missed the real conspiracy = the uber rich were just waiting and planning a comeback to before unions. They are supported by the Christian Right in the US and their plotting has been going on for just as long. I was raised and abused in a very Right wing church in a province with a theocracy for a government and have been reading their crap that my mother signed me up for for years.

    It is not the Illuminati and the Rothschild family or commie pinko liberal socialists. It is your own rich and “christians.”

  • Anonymous

    In Ancient Greece, not depicted on this graph. And Ancient Rome. And the Middle Ages and the Renaissance and the last 10,000 years. It is the way it works and always, always has. An education in this aspect of history would be helpful. Before corporations individuals like Carnegie did it. The only thing that stops it is good people working together and protesting out loud on the streets. Required: an sufficient education and guts. Most people have neither and don’t care. Vote every chance you get because not voting is not a protest it is surrender.

  • Anonymous

    “What happened from 73 to 75 and 79 to 82?”

    Those were years in recession. The data covers economic expansions.

  • Bomephus

    The to income ranges suffered the greatest decline in income during the recession, so it seems suspiciously misleading to omit the income declines. In fact, the lack of consideration of income losses totally invalidates the portrayal of disproportionate gains. Why are you class-baiting? Are you just another paid-for hate monger to get people who don’t think things through to vote for a certain party?

  • DBrown

    Christians? Where do you get that distinction with the uber rich? I’ve personally have never met a poor Jew in America and have met plenty of CEOs and lawyers that have nothing to do with religion.