The CBO (via Greg Mankiw):
Growth in after-tax income has been uneven across the income distribution, with upper-income groups seeing more rapid growth than lower-income groups. Much of that increase reflects the pattern of before-tax income growth.This is rather striking... only the top 5% highest earners (and mainly the top 1% earners) have seen their after-tax real income grow at a faster pace than real GDP per capita.
Update:
Adam (a reader) with a key point:
I think the more important conversation, though, is about equality of opportunity, not equality of results. That doesn't lend itself to simple data analysis unfortunately.Source: CBO
Love how you chose to only show the portion of the CBO charts that back up your views. Nevermind the obvious progressivity of the tax system or the fact that the highest quintile pays more than their share of taxes (unlike every other quintile). These analyses all ignore the mobility of income throughout the distribution and assume each quintile is composed of the same people.
ReplyDeletethis is AFTER-TAX income, thus INCLUDES the progressivity of the tax system.
ReplyDeleteI don't understand the obsession with demonizing high incomes when they clearly pay their share of taxes.
ReplyDeletei am pretty sure there is no demonization in this post, so please point me to the part that demonizes and i will respond.
ReplyDeletewhat this post does is simply show that not everyone has seen their incomes grow at the pace of the broader economy.
People who work hard can move up the income ladder and aren't trapped in one slice of the distribution.
ReplyDeletetrue...
ReplyDeletebut still concerning (to me) that earnings of percentiles 81-95 (i.e. the top 20% of all workers in the U.S. less the top 5%) have grown slower than per capita real GDP. if people are rising up the income ladder, in a perfect world it would not be at the expense of those that had been there previously.
there are broader questions here. has society matured to the point that the only marginal value add to the economy comes from 5% of the workforce and the divergence is justified? i personally hope not (and don't think so).
All I saw was a graph, not demonization. Not exactly new info, but a good thing to cover. Real wages for regular people have been stagnant or falling for years and this is how so many became over indebted.
ReplyDeleteGood chart. I think the more important conversation, though, is about equality of opportunity, not equality of results. That doesn't lend itself to simple data analysis unfortunately.
ReplyDeleteFunny, that is the same time period in which debt/gdp has skyrocketed - something highly correlated with asset price apreciation.
ReplyDeleteI wonder how much of the top quintile's income is from capital gains?
My conclusion from this is that a growth in the credit supply relative to gross national incomes benefits the rich.
Interesting comment by Anonymous. I find people in my day to day life that will look at something, data or otherwise, and interpret as something else. Looking at your graph I see more income for less people. Then I think about what a great opportunity it is to live here in the USA and be able to actually attain 1% status if you work hard enough and develop the skill set to get there. When looking at the 0-60% I bet you find people that are not seeking those skill sets ,and probably don't have the drive, to move up the income ladder (for those that stay there). To give an example I have an interest in a small retail company that employs 30 people. The part time and full time employees were given an opportunity to become managers and were explained the duties involved. There were 2 that decided the try it. One year later, one of the two is now back at part time and the other is still an assistant manager. Some people may have a view that these higher income people just don't share but I would say that the lower income not fighting to move to the top (speaking of those that stay in these bracets). Soo... 80/20 anyone (20 % do the work of 80%) Maybe a discussion of what the 0-60% have as skillsets. Its a world market these days and we (USA) better damn well create a highly value product to compensate for relatively high pay. Sorry for the small rant Jake. I check your blog a few times a week and really enjoy the data you post. Personally I think we are seeing the divide of educated, informed and hard working people from the rest but the relative stats begin to look like a third word county.
ReplyDeleteyou mean dumb and dumber is a socio economic trend?
ReplyDeleteHooligan > yea, something like that.
ReplyDeleteIs it bad to reopen this after 18 months? I was looking around for this kind of data and this was one of the better charts I found.
ReplyDeleteI would say that something like 30-40% growth in real dollars over 30 years in the bottom 60% is not bad, but would love to be able to compare it to historical. Of course, everyone focuses on the fact that the top grew so much faster. Is that necessarily bad? What if that's a necessary part of the dynamic?
People also forget 2 things...the top tiers turn over all the time. People from lower ranks are temporarily popping up when they sell their company, etc.
Most importantly, we take in a lot of immigrants that come with nothing but a will to work. That's a substantial poverty influx that was generated by inferior economic systems elsewhere, and it pulls down the average on the bottom. No one ever mentions that effect...essentially adding to the bottom every year from outside.
What does this chart look like in other countries, I wonder.