Thursday, February 17, 2011

Running to stand still

Emmanuel Saez of UC Berkeley, who has done some of the most important work recently on historical patterns of earnings inequality, has a wonderful (although deeply depressing) interactive chart which shows the proportions of total earnings growth going to different income groups in America since the First World War. The chart is here and you can play around with it to find where income growth went in various periods. The most astonishing thing I discovered there is that between 2002 and 2008, average incomes in the US went up by $2,388, but that none - literally none - of that growth went to average Americans (on average, of course!). In other words, as Saez's chart bleakly announces, in 2002-8 'all growth went to the richest 10%' and 'income for the bottom 90% declined'.

What I'm finding is that the more you look at income distribution in the US (and to a degree in the UK the patterns are similar), the more dramatic the inequity of it all becomes. I've been ranting on about this for a while now on this blog, but the harsh reality of economic growth passing the vast majority of Americans by even before the crisis is still shocking.