Saturday, August 15, 2009
Emmanuel Saez (UC-Berkeley, Department of Economics) has updated his income concentration data to reflect the latest statistics from the IRS's Statistics of Income Division on August 3, 2009: Striking it Richer: The Evolution of Top Incomes in the United States (Update with 2007 Estimate):
From 2006 to 2007, average real income per family grew by a solid 3.7%. Average real income for the top percentile grew faster (6.8% growth), further increasing the top percentile income share from 22.8 to 23.5% (Figure 2). Year 2007 is therefore the second highest year on record since 1913 almost equalling 1928, the record year when the top percentile share reached 23.9% (Figure 2). Even within the top percentile, the gains from 2006 to 2007 are extremely concentrated. The top .01% (top 14,988 US families, making at least $11.5m in 2007) share increased from 5.46% in 2006 to 6.04% in 2007 leaving well behind the 1928 peak of 5.04% (Figure 3). This shows that 2007 was an incredibly good year for the super rich. Year 2007 was actually also quite good for the bottom 99 percent of US families as their average income grew by 2.8%. This is the best annual increase since 1998. Real income growth for the bottom 99% had been very meagre during the Bush expansion starting in 2002. Even including 2007—a good year for ordinary US families-the top percentile captured 65% of total real income growth per family from 2002 to 2007 (Table 1).
[Click on figures and tables to enlarge.]
Hat tip to Ted Seto (Loyola-L.A.), who notes that Saez's methodology "significantly understates disparities in economic income":
Saez' data is pre-tax. Here's a brief description of his methodology:
We define income as the sum of all income components reported on tax returns (wages and salaries, pensions received, profits from businesses, capital income such as dividends, interest, or rents, and realized capital gains) before individual income taxes. We exclude government transfers such as Social Security retirement benefits or unemployment compensation benefits from our income definition. Therefore, our income measure is defined as market income before individual income taxes
Note, therefore, that the data series exclude tax-exempt interest, unrecognized gain, and other tax-advantaged economic income, most of which tends to accrue predominantly to the benefit of upper-income taxpayers. As a result, the report probably significantly understates disparities in economic income.
Update: Bloomberg, Richest in U.S. Had Record Share of Income in 2007, Studies Say.