New York Times: Rise of the Super-Rich Hits a Sobering Wall, by David Leonhardt & Geraldine Fabrikant:
The rich have been getting richer for so long that the trend has come to seem almost permanent.
They began to pull away from everyone else in the 1970s. By 2006, income was more concentrated at the top than it had been since the late 1920s. The recent news about resurgent Wall Street pay has seemed to suggest that not even the Great Recession could reverse the rise in income inequality.
But economists say — and data is beginning to show — that a significant change may in fact be under way. The rich, as a group, are no longer getting richer. Over the last two years, they have become poorer. And many may not return to their old levels of wealth and income anytime soon. …
Last year, the number of Americans with a net worth of at least $30 million dropped 24 percent, according to CapGemini and Merrill Lynch Wealth Management. …
The best-known data on the rich comes from an analysis of IRS returns by Thomas Piketty and Emmanuel Saez, two economists. Their work shows that in the late 1970s, the cutoff to qualify for the highest-earning one ten-thousandth of households was roughly $2 million, in inflation-adjusted, pretax terms. By 2007, it had jumped to $11.5 million.
The gains for the merely affluent were also big, if not quite huge. The cutoff to be in the top 1% doubled since the late 1970s, to roughly $400,000.
By contrast, pay at the median — which was about $50,000 in 2007 — rose less than 20%, Census data shows. Near the bottom of the income distribution, the increase was about 12%. …
The IRS has not yet released its data for 2008 or 2009. But Mr. Saez, a professor at the University of California, Berkeley, said he believed that the rich had become poorer. Asked to speculate where the cutoff for the top one ten-thousandth of households was now, he said from $6 million to $8 million.
(Hat Tip: Ann Murphy.)
