Average pre-tax income for the bottom 50 percent of the income distribution has stagnated since 1980 at some $16,000 per adult per year, and the income of the top 1 percent of the distribution has increased sharply. In 1980, adults in the top 1 percent averaged 27 times the income of those in the bottom 50 percent; today, they average 81 times that income.
The stagnation of incomes for households in the bottom 50 percent is particularly noteworthy given the growth for those in the top 1 percent. In 1980, the bottom half received about 20 percent of national income; by 2014, their share had declined to 12 percent. For the top 1 percent, the picture is exactly the reverse: In 1980, they received 12 percent of national income; in 2014, they received 20 percent.
Average pre-tax national income for middle class adults — with income between the median and the 90th percentile — has grown 40 percent since 1980, faster than previously estimated.
The researchers find that the redistribution of income through transfer programs has offset only a small fraction of the increase in inequality. Although transfers have increased throughSocial Security and other programs, the elderly and the middle class, rather than those in the bottom half of the income distribution more generally, have been the largest beneficiaries.“Given the massive changes in the pre-tax distribution of national income since 1980, there are clear limits to what redistributive policies can achieve,” they conclude.”
But the processes impoverishing the population are similar dynamics across the economy – “For the highly paid who remain, there is a growing income spread that mirrors the broader economy, says “The pay of the average managing director at Goldman will probably get even bigger, as there are fewer lower-level people to share the profits with,”