In 2012, Top 10% Take Biggest Share of Income Ever
The top 10% of earners earned more than half the country’s total income in 2012, the highest share since the government started collecting figures a century ago. The top 1% of earners took more than a fifth of all income, one of the highest levels in the last century, according to this article in today’s New York Times.
This new information on income inequality shows that any effect the recession had on slowing the growth of income inequality was short term. Since the recession, the incomes of middle- and lower-income earners have stagnated. Meanwhile, the top 1% captured 95% of income gains that have occurred since the end of the recession.
The study’s authors note that tax policy changes made by Congress, including tax increases on wealthy Americans, likely contributed to a one-time increase in income for top earners, as companies paid larger dividends and investors cashed out. But the article notes that “the temporary tax moves were not the only reason the top 1% did so well relative to everyone else in 2012,” and points out that richer households have disproportionately benefited from recent gains in the stock market.
This increase in income inequality is happening at the national level, but trends closer to home are following a similar pattern. The income disparity between Wisconsin’s richest and poorest families continues to widen, just as it does on a national level. Wisconsin’s richest residents have experienced dramatic increases in income since the mid-1990s, while middle- and lower-income Wisconsinites saw their incomes stagnate or decrease. As the chart below shows, people in the middle of the income spectrum in Wisconsin made modest gains since the mid-1990s, while the incomes of the top 1% rose by 43% over that period. People at the bottom of the income spectrum actually saw their income decrease. You can read more about income inequality in Wisconsin in our publication, “Pulling Apart 2012: Wisconsin’s Growing Income Inequality.”
The new information on income distribution on a national level gives us a snapshot of how the top earners are faring – and given that their share of total income has risen to record or near-record levels, we can say that the richest are doing very well indeed. Next week we will get some new information on how people at the bottom end of the income ladder are doing, when new poverty figures for 2012 are set to be released by the American Community Survey. We will be sharing information on the face of poverty in Wisconsin here on this blog; you can check back in then for more information.