The Economics Behind Occupy Wall Street: Shameful Income Inequality

From New Deal 2.0: http://www.newdeal20.org/2011/10/19/the-economics-behind-occupy-wall-street-shameful-income-inequality-62159/

by Bryce Covert

October 19, 2011

One of the biggest driving forces behind the movement is a phenomenon 30 years in the making.

What could we call the economics behind the Occupy Wall Street protests and the “We are the 99%” movement? One of the most driving themes behind both is this country’s growing and embarrassing income inequality. In the aftermath of the recession, incomes have been on the decline for most of us. Median household income fell to $49,445 last year, the lowest in more than a decade. Yet those making over $100,000 a year have actually seen improvements.

Not to mention that corporate profits have rebounded while wages have staggered backward. Those profits accounted for 88 percent of economic growth during the first year and a half after the recession ended, while wages and salaries for the rest of us only accounted for one percent. Corporate profits were $343 billion higher from 2008-2010 than predicted, while personal income for families was $265 lower than expected. The booming profits have brought little for most of us, but have meant nice raises for top executives: their median pay at 200 major companies was $9.6 million in 2010, up 12 percent from the year before.

But the income inequality that has urged so many take to the streets is not an overnight phenomenon. It’s part of a much longer-term trend. As the CBPP reports, the gap between the after-tax income of the richest one percent of Americans and the rest of us more than tripled over the last three decades, far before the Great Recession started. And after this 30-year rise, we’re now at a level of income inequality not witnessed since the Great Depression. As one telling example, in 2007 the top 1 percent had an income of $1.3 million, up $88,800 from just the year before — and that $88,880 gain is more than the total income of the average middle-income household. Meanwhile, the discrepancy between income at the top one percent and in the bottom fifth grew ever faster during the last three decades: in 1979, the top income was 22.7 higher, but by 2007 it was 74.6 times higher.

Continue reading at: http://www.newdeal20.org/2011/10/19/the-economics-behind-occupy-wall-street-shameful-income-inequality-62159/