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<div class="">February 15, 2013</div>
<h1>Incomes Flat in Recovery, but Not for the 1%</h1>
<h6 class="">By
<span>
<a href="http://topics.nytimes.com/top/reference/timestopics/people/l/annie_lowrey/index.html" rel="author" title="More Articles by ANNIE LOWREY"><span>ANNIE LOWREY</span></a></span></h6>
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<p>
WASHINGTON — Incomes rose more than 11 percent for the top 1 percent of
earners during the economic recovery, but not at all for everybody else,
according to new data. </p>
<p>
The <a href="http://elsa.berkeley.edu/%7Esaez/saez-UStopincomes-2011.pdf">numbers</a>, produced by Emmanuel Saez, an economist at the <a href="http://topics.nytimes.com/topics/reference/timestopics/organizations/u/university_of_california/index.html?inline=nyt-org" title="More articles about the University of California." class="">University of California, Berkeley</a>,
show overall income growing by just 1.7 percent over the period. But
there was a wide gap between the top 1 percent, whose earnings rose by
11.2 percent, and the other 99 percent, whose earnings declined by 0.4
percent. </p>
<p>
Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel
considered second only to the Nobel, concluded that “the Great Recession
has only depressed top income shares temporarily and will not undo any
of the dramatic increase in top income shares that has taken place since
the 1970s.” </p>
<p>
The disparity between top earners and everybody else can be attributed,
in part, to differences in how the two groups make their money. The
wealthy have benefited from a four-year boom in the stock market, while
high rates of unemployment have continued to hold down the income of
wage earners. </p>
<p>
“We have in the middle basically three decades of problems compounded by
high unemployment,” said Lawrence Mishel of the Economic Policy
Institute, a left-of-center research group in Washington. “That high
unemployment we know depresses wage growth throughout the wage scale,
but more so for the bottom than the middle and the middle than the top.”
</p>
<p>
In his analysis, Mr. Saez said he saw no reason that the trend would
reverse for 2012, which has not yet been analyzed. For that year, the
“top 1 percent income will likely surge, due to booming stock prices, as
well as retiming of income to avoid the higher 2013 top tax rates,” Mr.
Saez wrote, referring to income tax increases for the wealthy that were
passed by Congress in January. The incomes of the other “99 percent
will likely grow much more modestly,” he said. </p>
<p>
Excluding earnings from investment gains, the top 10 percent of earners
took 46.5 percent of all income in 2011, the highest proportion since
1917, Mr. Saez said, citing a large body of work on earnings
distribution over the last century that he has produced with the
economist Thomas Piketty of the Paris School of Economics. </p>
<p>
Concern for the declining wages of working Americans and persistent high
levels of inequality featured heavily in President Obama’s <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/s/state_of_the_union_message_us/index.html?inline=nyt-classifier" title="More articles about the State of the Union address." class="">State of the Union address</a>
this week. He proposed raising the federal minimum wage to $9 from
$7.25 as one way to ameliorate the trend, a proposal that might lift the
earnings of 15 million low-income workers by the end of 2015. </p>
<p>
“Let’s declare that in the wealthiest nation on Earth, no one who works
full time should have to live in poverty,” Mr. Obama said in his address
to Congress. </p>
<p>
Mr. Obama’s economic advisers say that he has been animated by the
country’s yawning levels of inequality, and the administration has put
forward several proposals to address the gap. Those include higher taxes
on a small group of the wealthiest families and an expansion of aid to
lower- and middle-income families through programs like the Affordable
Care Act. </p>
<p>
The data analyzed by Mr. Piketty and Mr. Saez shows that <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/i/income/income_inequality/index.html?inline=nyt-classifier" title="More articles about income inequality." class="">income inequality</a>
— as measured by the proportion of income taken by the top 1 percent of
earners — reached a modern high just before the recession hit in 2009.
The financial crisis and its aftermath hit wealthy families hard. But
since then, their earnings have snapped back, if not to their 2007 peak.
</p>
<p>
That is not true for average working families. After accounting for inflation, median family income <a href="http://www.census.gov/newsroom/releases/archives/income_wealth/cb12-172.html">has declined</a> over the last two years. In 2011, it stagnated for the poorest and dropped for those in the <a href="http://www.census.gov/prod/2012pubs/p60-243.pdf">middle of the income distribution</a>,
census data show. Median household income, which was $50,054 in 2011,
is about 9 percent lower than it was in 1999, after accounting for
inflation. </p>
<p>
Measures of inequality differ depending on whether they are measured
after or before taxes, and whether or not they include government
transfers like <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/s/social_security_us/index.html?inline=nyt-classifier" title="More articles about Social Security." class="">Social Security</a> payments, food stamps and other credits. </p>
<p>
Research led by the Cornell economist Richard V. Burkhauser, for instance, <a href="http://www.nber.org/papers/w17164.pdf">sought to measure the economic health of middle-class households</a>
including income, taxes, transfer programs and benefits like health
insurance. It found that from 1979 to 2007, median income grew by about
18.2 percent over all rather than by 3.2 percent counting income alone.
</p>
<p>
In an interview, Mr. Burkhauser said his numbers measured “how are the
resources that person has to live on changing over time,” whereas Mr.
Piketty and Mr. Saez’s numbers measure “how are different people being
rewarded in the marketplace.” </p>
<p>
“That’s a fair question to ask, but it’s a very different question to
ask than, ‘What resources do Americans have?’ ” Mr. Burkhauser said.
Notably, many of the Obama administration’s progressive policies have
been aimed at blunting the effects of income inequality, rather than
tackling income inequality itself. </p>
<p>
Mr. Saez has advocated much more aggressive policies aimed at income
inequality. “Falls in income concentration due to economic downturns are
temporary unless drastic regulation and tax policy changes are
implemented,” Mr. Saez said in his analysis. </p>
<p>
The recent policy changes, including tax increases and <a href="http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_crisis/financial_regulatory_reform/index.html?inline=nyt-classifier" title="More articles about financial regulatory reform." class="">financial regulatory reform</a>, he wrote, “are not negligible but they are modest relative to the policy changes that took place coming out of <a href="http://topics.nytimes.com/top/reference/timestopics/subjects/g/great_depression_1930s/index.html?inline=nyt-classifier" title="Recent and archival news about the Great Depression." class="">the Great Depression</a>. Therefore, it seems unlikely that U.S. income concentration will fall much in the coming years.” </p>
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