Between 2001 and 2006 the top one percent took over 53 percent of US income gains. There was an economic expansion (particularly from 1979 to 2006) but the goodies went to the top one percent. The middle benefited a bit (slightly less than one percent a year) but only if one discounts the fact that they were working more (2 income families) and more hours. Without that additional work, the incomes of the middle would have barely budged. The income of those in the bottom would have fallen.
If the economy had grown at the same rate that it actually did and if inequality had stayed at its 1979 levels, the average income of households in the middle would be more than 12,000 dollars a month higher than it is now. Differently put, the rich took our money.
US economic growth wasn’t exceptional. Most of the European economies grew at the same rate. The primary difference: our inequality soared. Another difference: we were working more hours. Put that way, their economies were actually stronger (GDP per hour worked rose faster). And, we should keep in mind that they have more secure retirement and health benefits.
The top .1% collectively rake in more than a trillion dollars a year. Also, most of the executives in this tier get amazing retirement packages—even when most workers have no defined benefits (so we hear all sorts of crap about the cost of pension funds for workers in the auto industry, for example, and nothing about the massive resource suck of executive perks, particularly executive perks for retirees).
A substantial majority of the top .1% are executives and managers (corporate and finance bad guys, the same one’s rolling in the dough right now). In the US gains at the top are driven by outrageous executive compensation and low taxes: “markets have been politically reconstructed to aid the privileged” (45). In 2007, average CEO pay for the top 350 companies was 12 million dollars a year.
The shift toward the super rich is a trend that begins in 1980 and continues to steadily increase (hmm…1980. What—or who—could have started this??). Tax rates on the rich have fallen dramatically. The rich are richer because they are taxed less heavily than they used to be (and our infrastructures are crumbling, schools are failing, people are dying because the rich are taxed less heavily than they used to be). Hacker and Pierson write: “if the effects of taxation on income at the top had been frozen in place in 1970, a very big chunk of the growing distance between the superrich and everyone else would disappear” (49).
And get this: this diminution of taxes for the rich happened even as support was growing for taxing them more. In 1939, 35% of Americans supported making the rich pay more taxes; in 1998 45% did; in 2007 56% did.
Taxes aren’t the only factor. Another is the decline in unions, again a decline that ocurred even as more and more private sectors workers said they wanted a union. This decline also has political causes, most significantly the failure of a major labor law to pass in 1978 not to mention Reagan’s stacking of the National Labor Relations Board with pro management appointees.
All of this, and people still blame our economy on our poorest citizens. Shameful.