New income figures: richest get even richer

The old Marxist aphorism is being proven yet again. The rich are getting richer while the poor are getting poorer. In fact, the richest of the rich in the United States are getting wealthier faster than just the merely rich, while people in the bottom 90 percent have basically seen their incomes stagnate over the past 15 years, moving up and down with the economic tides.

The most detailed technical analysis of the income gap comes from two academic economists, Thomas Piketty and Emmanuel Saez, who rely on data released by the IRS. These figures have a two-year lag, but the authors point out that press reports and anecdotal data show the trends established between 1990 and 2004 have if anything intensified over the past two years. (elsa.berkeley.edu/~saez/pikettyqje.pdf)

There was a deep chasm in 2004 between the very wealthy, the people in the top 1 percent whose family incomes averaged $326,270, and the rest of this country. The median family income that year was $43,389, meaning half the population earned less than that, and generally reflected the earnings of two or more people working in the household.

In constant dollars adjusted for inflation, the mean income has actually declined slightly since 1990, even as the incomes of the wealthy have vastly expanded. (wikipedia.org)

From 1990 to 2004, according to Piketty and Saez, the average family income of the top 1 percent of the population grew by 53 percent, while the bottom 90 percent saw their total incomes increase by just 2 percent. But the richer people were, the more their incomes increased. So the top one-tenth of 1 percent—with average family incomes of $2,018,910—enjoyed an increase of 85 percent over the same time period. And, dividing even further, the top one-tenth of that group wallowed in a jump of 112 percent. These top of the top have an average family income of $12,775,016.

This data is very broad and doesn’t catch income disparities based on gender. It doesn’t reflect what has happened to Black people in the United States, who average about 73 percent the income of their white counterparts, according to the Urban League.

It doesn’t distinguish between wage income of workers and the income of capitalists, who get their wealth mostly through various forms of profits. Wages alone put very few people into the top 1 percent. And it is not just income, but ownership of the means of production, that defines who become part of the ruling class.

These figures also don’t reflect the increased costs of housing, health care and education that are leaving so many workers deep in debt.

What the figures do show, however, is that income disparity in the U.S. in recent years has become greater than at any time since 1929—the year the bubble burst and the Great Depression began.

That disaster laid the basis for a huge working class struggle that spurred the formation of industrial unions and eventually won government social programs to alleviate poverty—like welfare, unemployment insurance, the minimum wage and Social Security. While these programs helped workers survive and get a living wage, they did not change the underlying tendency of capitalism to create poles of extreme wealth and extreme poverty, which will continue until another great working class struggle erupts.

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