America’s top earners, aka the 1%, absorbed 95% of the income gains made during the first three years of recovery from the Great Recession.
Though that group also saw the greatest loss in income during the recession (a 36.3% decline), it has nearly recovered, according to a study out of the University of California-Berkeley. With overall American income growth at 6% per family from 2009 to 2012, the top 1% of incomes grew by 31.4% and the remaining Americans’ incomes grew by 0.4%.
In 2012, the 1% held nearly a quarter of the country’s wealth, its largest share since before the Great Depression, according to the study. While the recession had put a dent in that share, it did not derail the massive gains in income share among the 1% during the past 40 years.
Emmanuel Saez, author of the study published Sept. 3, used data from the Statistics of Income Division of the Internal Revenue Service to make preliminary projections of 2012 numbers. He will update his projections when more complete statistics are released in 2014.
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Breaking Down Income
The study identifies income as “the sum of all income components reported on tax returns,” and by that definition, the 1% includes families with an income above $394,000 in 2012. The top 10% comprises families who earned more than $114,000 in 2012.
For reference, the median household income in 2012 was $51,017, according to the U.S. Census Bureau.
While income inequality reached high levels in 1928, the peak of the Roaring ’20s, it was even greater in 2012, when 50.4% of household income belonged to the top 10%. The study shows data from 1917 on, and that’s the greatest concentration of wealth that bracket has ever seen.
The Census Bureau report gives a glimpse at the other end of the income spectrum, post-recession.
For the three years the 1% collected the vast majority of income gains, 31.6% of the population had at least one period of poverty that lasted two months or longer, 3.5% lived in poverty the entire time.