Economist Jared Bernstein's paycheck comes from the Economic Policy Institute, a distinctly pro-labor Washington think tank, so filter his perspective as you please. But his analysis of new data on household income inequality from the Congressional Budget Office is damning, no matter how you slice it. (Thanks to Mark Thoma for the link.)
"Income inequality among households, both before and after Federal taxes, grew more quickly over the last two years of the series, 2003-05, than over any other two-year period on record, back to 1979," writes Bernstein. He provides the following bullet points:
- If we break households in groups of 20 percent each by income, well over half of household income (55 percent) was held by the richest fifth in 2005, the highest such share on record;
- The share of income held by the top 1 percent has climbed from 9 percent in 1979 to 18 percent in 2005.
- After-tax income of the bottom 20 percent grew 6 percent, or $1,800 over these years (1979-2005, in 2005 dollars); the middle-class gained $11,000, up 21 percent, over these 26 years. The average income of the top 1 percent, more than tripled, up 228 percent, for a gain of $781,000.
- By 2005, the average post-tax income of the bottom fifth was $15,300, the middle fifth: $50,200, and the top 1 percent: $1.1 million.
"Such concentration of income is unsustainable in a democratic society," concludes Bernstein. I guess we'll find out.