U.S. inequality is at a record high, a new analysis shows.
The income gap between the wealthy 1% (families with incomes above $394,000 in 2012) and everyone else is the widest it's been since 1927, the new study from UC Berkeley, Striking it Richer: The Evolution of Top Incomes in the United States, shows.
Breaking another record, the top 10% of earners took in "a level higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the 'roaring' 1920s," according to the analysis.
As the economy moved slowly away from the crash, incomes of the top 1% have grown more than 31%, while the incomes of the 99% grew 0.4%.
"The top 1% incomes captured just over two-thirds of the overall economic growth of real incomes per family over the period 1993-2012," the authors of the report, Emmanuel Saez and Thomas Piketty, write.
“In sum, top 1% incomes are close to full recovery while bottom 99% incomes have hardly started to recover,” states Saez.
According to their research, the continued increase in inequality can be attributed to a lack of progressive tax policies, weakened labor unions, and ongoing cuts to employee health and other benefits:
The labor market has been creating much more inequality over the last thirty years, with the very top earners capturing a large fraction of macroeconomic productivity gains. A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality. We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.