Two economists, Emmanuel Saez of the University of California, Berkeley, and Thomas Piketty of the Paris School of Economics have tracked the widening income inequality in this country the past three decades. Now they have updated their findings to account for the years since the Great Recession. Little has changed.
Consider that the top 10 percent of earners now hold more than half of all income, the highest level ever recorded. And the top 1 percent? They took more than one-fifth of all income, or among the highest levels ever.
For the bottom 99 percent, there was a bit of good news, incomes starting to grow again, if just by 1 percent last year. What that means, according to Saez and Piketty, is that the top 1 percent has gained 95 percent of the new income generated by the recovery. That’s right, practically every penny.
Hard to believe such a narrow slice drove nearly all the gains, or is deserving so of the raise.
It gets worse, actually. Among others, Joseph Stiglitz, a Nobel Prize-winning economist, has pointed to the role of income inequality in the sluggish recovery. He cites a weakened middle class less likely to spend, or invest in improving their lives. Diminished tax revenues mean governments have fewer dollars to make crucial investments in education and public works. Inequality also equates with more boom-and-bust, making the economy more vulnerable to trouble.
So there it is: This problem isn’t just about divvying the reward. It is harmful to the economy.