Main Street

Great Divergence Pie

In the first of her two excellent recent posts here on the vast chasm of income disparity in America, Susan Bruce examined the increasing share of the nation’s income going to those already making the most between the years 1979 and 2007, the period that has been dubbed ‘The Great Divergence’.

Now the Economic Policy Institute (EPI) shows us what I’ve dubbed the Great Divergence Pie (chart, that is):

As EPI explains:

According to the Congressional Budget Office, between 1979 and the start of the current recession in 2007, the pre-tax incomes of the upper 1% grew 214%, while the incomes of the middle-fifth and lowest-fifth grew, respectively, 25% and 4%. As the Chart shows, this extremely unbalanced growth implies that 38.7% of all of the income growth accrued to the upper 1% over the 1979-2007 period: a greater share than the 36.3% share received by the entire bottom 90% of the population.

Those in the top 10% of the income scale received 63.7% of all the income growth generated over the 1979-2007 period. In contrast, the bottom 20% of all earners saw such a small share of income growth – just 0.4% – that it barely shows up on the included pie chart.

Note: “Upper-middle fifth” (60-80%) refers to those in the income scale who make more than 60% of earners but less than the top fifth. “Lower-middle fifth” refers to those who fall in the lower 20-40% range of the income scale.

The top 5 percent took 54.3 percent of the income growth, while the bottom 60 percent combined received only 11 percent of total income growth during the Great Divergence. And then the Great Recession hit, with millions of working class and lower-income Americans thrown out of work, depressing their incomes further than at any time in the last seven decades.

Tags: income inequality