What's up with the 1% - Trends in annual income

Yesterday, I posted very briefly on the topic of whether the very rich are getting richer and thereby driving the mostly peaceful youth uprising we've seen in the streets and parks of major American cities. I am satisfied that the overall wealth inequality in our society hasn't changed that much in my lifetime, at least according to the numbers given in table two of this report. Today's graph is about income disparity over time, and the data are from the same table, which are ultimately derived from the Survey of Consumer Finances conducted by the Federal Reserve Board.


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Here we can see two things right off the bat. Firstly, the top %1 are indeed taking more and more money home each year, as the red portion of the chart climbs erratically from 12.8 to 21.3% of the total income. Secondly, the next 19% of earners are holding relatively steady over time, as the overall shape of the entire graph is being driven by the shape of the 1% in red. So maybe the protesters really are on to something when they pin the blame on the 1% for the current state of affairs.

It is unclear to me, however, why people should feel worse off just because some other people are getting better off, although I've heard it is a well-documented aspect of human nature. Next time, we'll look at whether the middle class is itself being squeezed.

What's up with the 1% - Trends in net worth

Last night on TRMS we were treated to this graph of percentage income increases over the years. It made me think, is annual income what this is really about? I had been given to understand that the problem is wealth disparity, rather than income disparity. Maybe, though, I've been misled, so let's look at the numbers.

On the theory that wealth disparity might actually be a major component of the collective angst, I dug into this report to find out how net worth (defined on page 6) has trended since 1983:

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The results shown above (taken from table 2 on page 44) were really quite surprising, at least to me. It turns out that the top 1% aren't going gangbusters after all, at least not if the Levy Economics Institute is to be trusted on such matters. Moreover, to the extent that the top earners are getting even wealthier, it is primarily on account of the top 5%, rather than the top 1% which have been trending flat for two and a half decades. So, five-percenters, consider yourself warned. Once the rabble eat the super-rich, you're next.

Tomorrow: Income trends