Posted inCapitalism / Inequality / ToMl / USA Empire / Wage / Worker

Wages for the top 0.1% grew more than twice as fast, up a spectacular 345.2%

Newly available wage data tell a familiar story: In every period since 1979, wages for the bottom 90% were continuously redistributed upward to the top 10% and frequently to the very highest 1.0% and 0.1%. This unceasing growth of wage inequality that undercuts wage growth for the bottom 90% reaffirms the need to place generating robust wage growth for the vast majority and worker power at the center of economic policymaking.

For last year, 2019, the data show a continuation of the trend of annual wages rising fastest for those in the top 10% while those in the bottom 90% saw below-average wage growth. However, within the top 10%, wages rose faster for those in the 90th–99th percentiles than for those in the top 1%.

A similar pattern as in 2019 prevailed over the entire 2007–2019 business cycle as wages were redistributed in two ways, up from the bottom 90% to the top 10% and within the top 10% downward from the top 1% to those in the 90th–99th percentiles. Still, the top 1% has done far better in the 2009–2019 recovery (wages rose 20.4%) than did those in the bottom 90% (wages rose only 8.7%).

the top 1% and the very tippy top, those in the top 0.1%, were the clear winners over the longer-term 1979–2019 period:

The top 1.0% saw their wages grow by 160.3%; and
wages for the top 0.1% grew more than twice as fast, up a spectacular 345.2%.
In contrast, those in the bottom 90% had annual wages grow by 26.0% from 1979 to 2019.

This disparity in wage growth reflects a sharp long-term rise in the share of total wages earned by those in the top 1.0% and 0.1%.

Over the longer term, since 1979, there was far faster wage growth at the top (highest 1.0%) and tippy top (upper 0.1%), signaling a major redistribution upward from the bottom 90%. As Figure A shows, the top 1.0% of earners are now paid 160.3% more than they were in 1979. Even more impressive is that those in the top 0.1% had more than double that wage growth, up 345.2% since 1979 (Table 1). In contrast, wages for the bottom 90% grew only 26.0% in that time. The other segments of the top 10% (those in the 90th–95th percentiles and 95th–99th percentiles) also had faster-than-average wage growth since 1979, up 51.8% and 75.1%, but nowhere near as fast as the wage growth at the top. Thus, wages have been redistributed upward since 1979 from the bottom 90% to the top 10% and within the top 10% to the top 1% and especially to the top 0.1%.

This pattern of upward wage distribution also prevailed over the recent recovery (since 2009): The bottom 90% experienced modest annual wage growth—reflecting growing annual hours as well as higher hourly wages—up 8.7% from 2009 to 2019. In contrast, the wages of the top 1.0% and top 0.1% grew, respectively, 20.4% and 30.3% in the last 10 years.

In the most recent year, however, wages grew fastest for the bottom 9% of the top 10% (up 4.2% for 90th–95th percentiles, up 2.2% for 95th–99th percentiles) and slower than average for the bottom 90% (up 1.7%) and the top 0.1% and top 1% (both up 1.0%).

One key characteristic of the Great Recession downturn was the big hit on the very highest earners, with the top 1% and top 0.1% seeing 15.6% and 26.1% declines over the two years from 2007 to 2009. Even by 2019 the top 0.1% had not recovered from this sharp fall at the start of the business cycle as the top 1% as a whole earned only 1.6% above their 2007 earnings. Thus, the business cycle from 2007 to 2019 was one in which wages were redistributed from the bottom 90% to the top 10% and within the top 10% from the top 1% to the remainder of the top 10% (the 90th–99th percentiles). The one constant wage dynamic in every period since 1979 has been that the wages for the bottom 90% are continuously redistributed upward.

It is worth noting that our series on the wage growth of the bottom 90% corresponds closely to the Social Security Administration’s series on median annual earnings: Between 1991 and 2019 the real median annual wage grew 23.8%, very close to the 26.0% growth for the bottom 90% over that same time period.

It is also noteworthy that the wage growth for the bottom 90% was almost entirely concentrated in the two periods of sustained low unemployment representing 11 of the 40 years: The bottom 90%’s wage growth in the 1995–2000 and 2013–2019 periods represented 90% of all the wage growth ($7,230 of $8,043) over the entire 1979–2019 period. The shift of wages away from the bottom 90% meant that their wages rose 26.0% rather than the 44.6% increase obtained on average over the 1979–2019 period, some 18.6 percentage points faster growth.

These disparities in long-term wage growth reflect a major redistribution upward of wages since 1979, as noted earlier. The bottom 90% earned 69.8% of all earnings in 1979 but only 60.9% in 2019 (Table 2). In contrast, the top 1.0% nearly doubled its share of earnings from 7.3% in 1979 to 13.2% in 2019. The growth of wages for the top 0.1% is the major dynamic driving the top 1.0% earnings as the top 0.1% more than tripled its earnings share, from 1.6% in 1979 to 5.0% in 2019.

The bottom 90% lost some ground over the recent business cycle, 2007–2019, as their wage share fell slightly, from 61.1% to 60.9%. The winners in the recent business cycle were not the top 1%, whose wage share fell from 14.1% to 13.2%. Rather, the upward redistribution of wages from the bottom 90% and the shift away from the top 1.0% in the recent business cycle accrued to the other high earners in the top 10%, those earning between the 90th and 95th percentiles (averaging $129,998 in 2019) and between the 95th and 99th percentiles (averaging $210,511 in 2019).

— source Economic Policy Institute, ssa.gov | Lawrence Mishel, Jori Kandra | Dec 1, 2020

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