Tuesday, August 09, 2016

Does the top 1 percent earn 85 percent of income? Is it 52 percent? Something Else?

According to the book The Economics of Macro Issues (6e, 2014), the top 1 percent earn 13.4% of income in the USA (p. 81). This came up in a letter to the editor by me in today's San Antonio Express-News. One of their columnists said it was 52 percent but had recently been 85 percent. What I think he got wrong was that there was a year when the top 1 percent got 85 percent of the growth in income, not total income. Anyway, click here to read the letter. It is also below.

But before you read the letter, here is something to keep in mind (it is from a post I did a few years ago)

"It is true that the top 1% of earners have seen their share of income rise. But 57% of those in the top 1% in 1996 were not there in 2005. The incomes of the top 1% fell about 16% from 2007-09 while the median income fell just 1.5%. The number of people making $1 million or more per year fell 40%." (although I posted that myself a few years ago I can't find the source)

But this link from the WSJ in 2013



"The one-percenters saw their incomes slide 36.3% during the 2007-2009 recession; incomes of the 99-percenters fell 11.6% during the downturn"


"All told, average inflation-adjusted income per family climbed 6% between 2009 and 2012, the first years of the economic recovery. During that period, the top 1% saw their incomes climb 31.4%"

Now my letter:

"Income growth

Re: “No revolution if there’s no civilization,” Brian Chasnoff, July 28:

Brian Chasnoff wrote, “(Bernie) Sanders repeated on Wednesday that the top 1 percent earns 85 percent of income, although that claim is outdated; in the past two years, it fell to 52 percent, according to Politifact.”

That claim is actually for the share of growth in income since 2009, not total income at any one point in time. This makes a big difference.

Politifact gets its information on this from a report by the Economic Policy Institute. It says (right in the first full paragraph) that “the top 1 percent captured 85.1 percent of total income growth between 2009 and 2013” (and that share has now fallen to 52 percent).

Notice it says income growth, not income. What it discusses is the share of “new” income going to the top 1 percent. They mean the share of income growth.

When the Census Bureau reports on incomes every year, usually the top 20 percent of households have 50 to 55 percent of the income. So the top 1 percent would have much less than that in total income share. On page 9, it shows that the top quintile in 2014 had 51.4 percent of all income.

Cyril Morong, Ph.D., associate professor of economics, San Antonio College"

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