WASHINGTON: Financial inequality became even wider in the US last year, with average income for the top 1 percent of households surging 7.7 percent to $1.36 million.
Income for the richest sliver rose twice as fast as it did for the remaining 99 percent of households, according to an updated analysis of tax data by Emmanuel Saez, an economics professor at the University of California, Berkeley.
Still, the incomes of households outside the top 1 percent appear finally to be recovering from the Great Recession, which officially ended seven years ago. After accounting for inflation, their average income rose 3.9 percent last year to $48,768 — the strongest annual gain since 1998. Contrast that with the period from 2008 to 2011, when the economy remained in a rut and inflation-adjusted income for the bottom 99 percent of households was falling.
“It is indeed the best growth year for the bottom 90 percent and bottom 99 percent since the late 1990s,” Saez said. “At the same time, top incomes grow even faster, leading to a further widening of inequality, which continues an alarming trend.”
Income inequality has been a rallying cry of the 2016 election, with more Americans turning fearful and angry about a shrinking middle class. Donald Trump has pledged to restore prosperity by ripping up trade deals and using tariffs to return manufacturing jobs from overseas. Hillary Clinton has backed a debt-free college option and higher minimum wages to help the middle class.
Much of the debate has been fueled by research conducted over the years by Saez and his collaborator Thomas Piketty.
The IRS data reviewed by Saez shows that income growth last year was greatest among the super-wealthy — the top 0.1 percent of households. Their incomes climbed nearly 9 percent to an average of $6.75 million.
The tax data helps capture income inequality more fully than government surveys, which often fail to include the tiny fraction of ultra-rich Americans who play professional sports, star in Hollywood blockbusters, manage global corporations or trade successfully in the financial markets.
The Labor Department earlier said the number of Americans filing for unemployment benefits rose last week, but remained below a level associated with a healthy labor market.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 268,000 for the week ended June 25, said the department.
Claims for the prior week were revised to show 1,000 fewer applications received than previously reported. Last week’s increase was in line with economists’ expectations.
Claims have now been below 300,000, a threshold associated with a strong jobs market, for 69 consecutive weeks, the longest streak since 1973.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, was unchanged at 266,750 last week.
The low level of layoffs suggests underlying strength in the labor market even though hiring slowed sharply in May, with nonfarm payrolls increasing only 38,000, the smallest gain since September 2010.
Although economists believe job growth picked up in June, there are worries that Britain’s vote last week to leave the European Union could prompt companies to delay hiring amid uncertainty over how the so-called Brexit will unfold.
Income for the richest sliver rose twice as fast as it did for the remaining 99 percent of households, according to an updated analysis of tax data by Emmanuel Saez, an economics professor at the University of California, Berkeley.
Still, the incomes of households outside the top 1 percent appear finally to be recovering from the Great Recession, which officially ended seven years ago. After accounting for inflation, their average income rose 3.9 percent last year to $48,768 — the strongest annual gain since 1998. Contrast that with the period from 2008 to 2011, when the economy remained in a rut and inflation-adjusted income for the bottom 99 percent of households was falling.
“It is indeed the best growth year for the bottom 90 percent and bottom 99 percent since the late 1990s,” Saez said. “At the same time, top incomes grow even faster, leading to a further widening of inequality, which continues an alarming trend.”
Income inequality has been a rallying cry of the 2016 election, with more Americans turning fearful and angry about a shrinking middle class. Donald Trump has pledged to restore prosperity by ripping up trade deals and using tariffs to return manufacturing jobs from overseas. Hillary Clinton has backed a debt-free college option and higher minimum wages to help the middle class.
Much of the debate has been fueled by research conducted over the years by Saez and his collaborator Thomas Piketty.
The IRS data reviewed by Saez shows that income growth last year was greatest among the super-wealthy — the top 0.1 percent of households. Their incomes climbed nearly 9 percent to an average of $6.75 million.
The tax data helps capture income inequality more fully than government surveys, which often fail to include the tiny fraction of ultra-rich Americans who play professional sports, star in Hollywood blockbusters, manage global corporations or trade successfully in the financial markets.
The Labor Department earlier said the number of Americans filing for unemployment benefits rose last week, but remained below a level associated with a healthy labor market.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 268,000 for the week ended June 25, said the department.
Claims for the prior week were revised to show 1,000 fewer applications received than previously reported. Last week’s increase was in line with economists’ expectations.
Claims have now been below 300,000, a threshold associated with a strong jobs market, for 69 consecutive weeks, the longest streak since 1973.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, was unchanged at 266,750 last week.
The low level of layoffs suggests underlying strength in the labor market even though hiring slowed sharply in May, with nonfarm payrolls increasing only 38,000, the smallest gain since September 2010.
Although economists believe job growth picked up in June, there are worries that Britain’s vote last week to leave the European Union could prompt companies to delay hiring amid uncertainty over how the so-called Brexit will unfold.
