Richest 1 percent earn biggest share since 1920s - New York News

Richest 1 percent earn biggest share since 1920s

Posted: Updated:

By PAUL WISEMAN

WASHINGTON (AP) — The gulf between the richest 1 percent and the rest of America is the widest it's been since the Roaring '20s.

The very wealthiest Americans earned more than 19 percent of the country's household income last year — their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.

U.S. income inequality has been growing for almost three decades. And it grew again last year, according to an analysis of Internal Revenue Service figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of them, Berkeley's Emmanuel Saez, said the incomes of the richest Americans surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.

In 2012, the incomes of the top 1 percent rose nearly 20 percent compared with a 1 percent increase for the remaining 99 percent.

The richest Americans were hit hard by the financial crisis. Their incomes fell more than 36 percent in the Great Recession of 2007-09 as stock prices plummeted. Incomes for the bottom 99 percent fell just 11.6 percent, according to the analysis.

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

The top 1 percent of American households had pretax income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.

The gap between rich and poor narrowed after World War II as unions negotiated better pay and benefits and as the government enacted a minimum wage and other policies to help the poor and middle class.

The top 1 percent's share of income bottomed out at 7.7 percent in 1973 and has risen steadily since the early 1980s, according to the analysis.

Economists point to several reasons for widening income inequality. In some industries, U.S. workers now compete with low-wage labor in China and other developing countries. Clerical and call-center jobs have been outsourced to countries such as India and the Philippines.

Increasingly, technology is replacing workers in performing routine tasks. And union power has dwindled. The percentage of American workers represented by unions has dropped from 23.3 percent in 1983 to 12.5 percent last year, according to the Labor Department.

The changes have reduced costs for many employers. That is one reason corporate profits hit a record this year as a share of U.S. economic output, even though economic growth is sluggish and unemployment remains at a high 7.2 percent.

America's top earners tend to be highly paid executives or entrepreneurs — the "working rich" — instead of elites who enjoy lives of leisure on inherited wealth, Saez wrote in a report that accompanied the new analysis.

Still, he added: "We need to decide as a society whether this increase in income inequality is efficient and acceptable."

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Your MoneyMore>>

  • Teens want back-to-school gadgets, not clothes

    Teens want back-to-school gadgets, not clothes

    Thursday, August 28 2014 9:52 PM EDT2014-08-29 01:52:52 GMT
    For many students, school starts next week. So what will your teens be asking you to buy? Technology.That's right: they are willing to wear last year's clothes and instead spend money on the latest tech. Gone are the days of securing your status in high school with the right clothes. Now your teens need to own the newest tablet or smart phone and its accessories.
    For many students, school starts next week. So what will your teens be asking you to buy? Technology.That's right: they are willing to wear last year's clothes and instead spend money on the latest tech. Gone are the days of securing your status in high school with the right clothes. Now your teens need to own the newest tablet or smart phone and its accessories.
  • Conference call: your bathroom break

    Conference call: your bathroom break

    We asked several people what they do when they are on a conference call. Most of them answered: "The bathroom." Yes, according to a survey conducted by InterCall, 47 percent of 500 people admitted to taking a conference call from the bathroom.
    We asked several people what they do when they are on a conference call. Most of them answered: "The bathroom." Yes, according to a survey conducted by InterCall, 47 percent of 500 people admitted to taking a conference call from the bathroom.
  • Monitoring your kids' driving in real time

    Monitoring your kids' driving in real time

    Wednesday, August 27 2014 10:46 PM EDT2014-08-28 02:46:07 GMT
    Many new Ford and GM cars have built-in technology that allows you to monitor speed, signaling, and navigation when your child is driving. But when it comes to this type of digital snooping, teens and their parents often have differing opinions. Kids may call it an invasion of privacy. Most parents, of course, will likely feel otherwise.
    Many new Ford and GM cars have built-in technology that allows you to monitor speed, signaling, and navigation when your child is driving. But when it comes to this type of digital snooping, teens and their parents often have differing opinions. Kids may call it an invasion of privacy. Most parents, of course, will likely feel otherwise.
  • Local NewsLocal NewsMore>>

  • Mayor pushes back pre-k concerns

    Mayor pushes back pre-k concerns

    Thursday, August 28 2014 10:16 PM EDT2014-08-29 02:16:46 GMT
    Mayor Bill de Blasio, educators and city leaders gathered at p.s. 307 in Brooklyn on Thursday to talk with pride about more than 50,000 kids who have enrolled in pre-kindergarten. Universal full-day pre-k was a platform of his campaign when he ran for mayor.Schools Chancellor Carmen Farina also feels the pre-k program is ready for launch.
    Mayor Bill de Blasio, educators and city leaders gathered at p.s. 307 in Brooklyn on Thursday to talk with pride about more than 50,000 kids who have enrolled in pre-kindergarten. Universal full-day pre-k was a platform of his campaign when he ran for mayor.Schools Chancellor Carmen Farina also feels the pre-k program is ready for launch.
  • Revel closing, but property fight goes on

    Revel closing, but property fight goes on

    Thursday, August 28 2014 9:34 PM EDT2014-08-29 01:34:07 GMT
    A casino piano tuner in Atlantic City is fighting the state's attempt to seize his late parents' house as part of a redevelopment project connected to the closing Revel Hotel Casino. Charlie Birnbaum says the house in the shadow of the failed casino was his father's livelihood. He says he is attached to the home, even though his mother was killed there in 1998.
    A casino piano tuner in Atlantic City is fighting the state's attempt to seize his late parents' house as part of a redevelopment project connected to the closing Revel Hotel Casino. Charlie Birnbaum says the house in the shadow of the failed casino was his father's livelihood. He says he is attached to the home, even though his mother was killed there in 1998.
  • 'Resting comfortably'

    Joan Rivers rushed to NYC hospital

    Joan Rivers rushed to NYC hospital

    Thursday, August 28 2014 9:22 PM EDT2014-08-29 01:22:56 GMT
    Joan Rivers was reportedly rushed to a hospital in New York City Thursday morning after she stopped breathing during a throat surgery.  The TV host and comedian was apparently undergoing the procedure in a clinic when she stopped breathing.
    Joan Rivers was reportedly rushed to a hospital in New York City Thursday morning after she stopped breathing during a throat surgery.  The TV host and comedian was apparently undergoing the procedure in a clinic when she stopped breathing.
Powered by WorldNow
Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | New Terms of Service What's new | Ad Choices