A new study confirms what America has been feeling for decades: the rich are getting richer while the rest of the country struggles to make ends meet.
The study, released by economists at UC Berkeley, shows the wealth gap between the top 1 percent of earners and the bottom 99 percent is the widest it’s been since 1928. Between 1993 and 2012, real income for the top 1 percent rose 86.1 percent, while the bottom 99 percent saw their income rise by only 6.6 percent.
The top 1 percent, defined as households with incomes of over $394,000 in 2012, also recovered from the Great Recession faster than anyone else. Ninety-five percent of income gains reported since 2009 have gone to the top 1 percent.
Ultimately, the study says, the choice of how much inequality we tolerate is up to us.
“A number of factors may help explain this increase in inequality, not only underlying technological changes but also the retreat of institutions developed during the New Deal and World War II – such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality,” wrote UC Berkeley Researcher Emmanuel Saez. “We need to decide as a society whether this increase in income inequality is efficient and acceptable and, if not, what mix of institutional and tax reforms should be developed to counter it.”
Click here to read the full text of the study.