THE Census released new figures on income and poverty today. (You can see summary slides here.) They're both grim and unsurprising. In 2012 the real median household income in America was flat relative to 2011 and down considerably from the pre-recession level. The poverty rate remains stuck at 15%. Looking beneath the headline figures I found this chart particularly interesting:
There's a very interesting story about inequality here. From the 1970s to the late 1990s inequality grew because the incomes of the rich were growing much faster than the incomes of those at the median and below—but incomes at the median and below were growing. Since the late 1990s, however, incomes across the income spectrum have stagnated and declined, from the 10th percentile right on up to the 95th.
Indeed, if you look at the latest data on top incomes from Thomas Piketty and Emmanuel Saez you see that this trend applies, to some extent, even at the very top of the spectrum. The real incomes of the top 1%, 0.1%, and 0.01% were all below their 2000 level as of 2012. Now, that has a lot to do with the position in the business cycle. Top incomes were well above the 2000 level, then dropped precipitously during the crisis. The incomes of the top 0.01% plummetted 47% from 2007 to 2009, and have since risen 49%. There is good reason to believe that those at the top will soon attain new real income highs. Meanwhile the real incomes of the bottom 90% fell 12% from 2007 to 2009...then fell 2% from 2009 to 2012.
Yet while no one is weeping for the very rich, it is interesting to note how different the past 12 years has been from the decades prior. The very rich didn't previously have any difficulty holding on to their gains; from 1975 to 2000 the real incomes of the top 0.01% rose (sit down for this) by 761%. (The equivalent figure for the bottom 90% is 13%.)
It's a fascinating development. And it will be fascinating, and a little frightening, to see whether it continues. It is disconcerting enough when the income share of the superrich marches inexorably higher. When it does so amid an overall picture of income stagnation that is very bad news indeed.
The Economist_Incomes_ Stagnation for everyone.pdf