Over the last three decades, the really rich got a lot richer and the rest of U.S. earners didn’t fare very well in comparison, according to a report from the nonpartisan Congressional Budget Office that likely will invigorate the Occupy Wall Street movement.
The dominance of the top “1%” of earners was evident in the report on income between 1979 and 2007 – and that was a major factor in the widening of the income gap, according to the CBO’s findings.
The top 1 percent of Americans with the highest incomes saw their earnings grow by an average of 275 percent. At the same time, the 60 percent of those in the middle of the income spectrum saw their earnings grow by just 40 percent. The poorest fifth of Americans saw income rise by 18 percent.
“The rapid growth in average real household market income for the 1 percent of the population with the highest income was a major factor contributing to the growing inequality in the distribution of household income between 1979 and 2007,” the report said.
For all Americans, inflation-adjusted average household income, measured after government transfers and federal taxes, grew by 62 percent, the report said.
The findings are based on data analyzed by the Internal Revenue Service and the Census Bureau. The numbers are consistent with studies from private academic researchers and economists.
The CBO report, requested years ago, will fuel Congressional debate on tax policies, and provide more incentive for the wave of protests across the country that started weeks ago targeting corporate greed on Wall Street. Many of the demonstrators have dubbed themselves the “99%.”
The CBO report does not offer a clear reason for the “1%” factor, although executive compensation – a heated issue among protesters – is cited.
“The precise reasons for the rapid growth in income at the top are not well understood, though researchers have offered several potential rationales, including technical innovations that have changed the labor market for superstars (such as actors, athletes, and musicians), changes in the governance and structure of executive compensation, increases in firms’ size and complexity, and the increasing scale of financial-sector activities,” the report said.