The Rich get Richer and ...

[Greebo]

We all know how that goes right?

And we've all heard the news about the shrinking middle class?

Well I came across this link today:
http://www.taxfoundation.org/publications/show/250.html

And being the nerd that I am, I decided to run some numbers, cause there's lots of numbers in that article. I found out - its actually true. Not as profoundly as some would have us think, but over the last 20 years, its true!

The article shows number of people who fall into the following income brackets, from 1980 to 2006:
Top 1
Top 2-5
Top 5 Total
Top 6-10
Top 10 Total
Top 11-25
Top 25 Total
Top 26-50
Top 50 Total
Bottom 50

It also shows, in billions, the total Adjusted Growth Income of those brackets.

So I decided to do one further and show, per year, for each group, what % of the total they groups fell into.

I was surprised by doing the numbers of filings first.

From 1980 to 2006, the distribution of people between the income groups DID NOT CHANGE by as much as 1%, not for a single year, not for the whole 26 years. In 1980, 0.9996% of the population were in the top 1%, and in 2006, 0.9999% were in the top 1%. All the way down the list, every group has the same slice of the pie when it comes to how many people fall into which economic group.

That amazed me.

So then I ran the AGI numbers. Now, in this case, I had to start in 1987 because the definition of AGI changed in 1986, so I've only got 19 years worth of data here.

In 1987, the top 1% of income earners reported earning a total of 11.29% of the total of Adjusted gross incomes. In 2006, they reported 22.06% for a gain of about 11%.

2-5%: 12.80% up to 14.60% +1.8%
6-10: 11.01 down to 10.65% -.36%
11-25: 23.93 down to 20.84% -3.09%
26-50: 24.29 down to 19.33 -4.96%
Bot 50: 16.68 down to 12.51 -4.17%

So over 19 years, 11% of the income has moved into the top 1%, fairly evenly divided between the bottom 90%, with no single subset having a decrease of even 5% (and the bottom 50 doing better than the middle 25- just a bit...)

I'd love to find numbers that show, by income bracket, the debt levels over time. I wonder if there is a correlation...

[EmilyD]

I coulda told you that ... without the numbers to back it up

Thanks for the numbers!

[Missourimom]

I just came back from having lunch with my husband and we each had a few drinks. I will say that I read Greebo's post and half way through, my mind was swirling with confusion. I sure am glad you all can figure it out!

[Greebo]

I coulda told you that ... without the numbers to back it up

Thanks for the numbers!

But the real question to be asked here is WHY?

I *suspect* it has to do with the use of consumer debt, because that number has increased DRASTICALLY in the last 20 years. If so, begs the follow-up question: "Who's fault is that?" But - I'm not asking that question yet, because I'm not playing 'leap to conclusions' on this one.

[Greebo]

I just came back from having lunch with my husband and we each had a few drinks. I will say that I read Greebo's post and half way through, my mind was swirling with confusion. I sure am glad you all can figure it out!

Short version: The #'s of ppl in each income bracket haven't changed much. The dollars in each bracket HAVE changed - about 12% has moved into the top 1%, with about 4% coming from the lower 3 income brackets.

[NMMatt]

From 1980 to 2006, the distribution of people between the income groups DID NOT CHANGE by as much as 1%, not for a single year, not for the whole 26 years. In 1980, 0.9996% of the population were in the top 1%, and in 2006, 0.9999% were in the top 1%. All the way down the list, every group has the same slice of the pie when it comes to how many people fall into which economic group.

That amazed me.

That's because the definitions didn't change . The cutoff earnings for the top 1% and all other groups obviously changed, also 1% of the population in 1980 is more people than 1% in 2006 - however 1% is still 1%.

[Greebo]

That's because the definitions didn't change . The cutoff earnings for the top 1% and all other groups obviously changed, also 1% of the population in 1980 is more people than 1% in 2006 - however 1% is still 1%.

Ohfor****ssake.

I can't believe I missed that.

Derrr. I spent 15 minutes working up meaningless numbers ROFL

[NMMatt]

And to answer why mathematically... the incomes of the top earners have increased by a greater percentage relative to the bottom 90%. For example if top incomes rise on average 10% every year while the rest only increase on average 3%, after 20 years you will see the top incomes represent a larger share of the total than the bottom. Low income earners didn't see their salaries shrink, rather their salaries didn't see as high a rate of increase, therefore by a relative measure they decreased 5% while the top increased.

And to answer why this happened - I'd argue that much of it has to do with conflicts of interest in corporate governance that has led to executive salaries growing exponentially and becoming unrelated to the performance of the company.

[NMMatt]

Ohfor****ssake.

I can't believe I missed that.

Derrr. I spent 15 minutes working up meaningless numbers ROFL

LOL - it happens .

[MomToTwoBoys]

It doesn't surprise me in all reality. Even without looking at numbers, you have to factor in everything that businesses deal with that rise due to inflation and the changes that a recession brings in. Alot of states don't increase minimum wage and the number of salaried positions even varies depending on how the overall markets do that year.

My DH got a raise of about 85 cents last year and judging by how much food prices and gas prices have gone up, plus how often his job becomes incredibly unbusy (he's in the freight forwarding business and their biggest customer happened to be RV corporations), we sort of evened out. He brought in $41,115 last year and I contributed about $9,144, so out of a 50k combined income per year we didn't notice that we were getting ahead. He made about 5k more this past year than the year before and my income sort of shifted a bit.