Protestors affiliated with the Occupy Wall Street movement have raised awareness about the degree to which economic rewards in the U.S. are more concentrated in recent decades. The figure below shows the shares of income growth that have been claimed by households, grouped by income-class; it perfectly illustrates our country’s growing problem with economic inequality.
The highest-income 1 percent of households captured nearly 60 percent of all income gains between 1979 and 2007, a period covering the last three business cycles up through the last year before the Great Recession. In contrast, the bottom 90 percent of households on the income scale captured less than 9 percent of all income gains over this period. And the bottom 90 percent claimed just one-quarter of what the top 0.1 percent (one one-thousandth) of households gained (36 percent) over 1979-2007.
In short, the claim that income gains have become very concentrated in recent decades is clearly supported by facts. What will happen in the current business cycle is unknown: While top incomes typically fall more during recession years (as stock market declines disproportionately affect those with the highest incomes), they also typically rebound much more quickly.