Half of the U.S. got nothing even as the economy doubled.
Approximately 117 million adults stuck on the lower half of the income ladder — "has been completely shut off from economic growth since the 1970s. Even after taxes and transfers, there has been close to zero growth for working-age adults in the bottom 50 percent." economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, discovered in the most thoroughgoing analysis to date of how the income kitty — like paychecks, profit-sharing, fringe benefits and food stamps — is divided among the American population.
Stagnant wages have sliced the share of income collected by the bottom half of the population to 12.5 percent in 2014, from 20 percent of the total in 1980. Where did that money go? Essentially, to the top 1 percent, whose share of the nation's income nearly doubled to more than 20 percent during that same 34-year period.
Average incomes, adjusted for inflation, grew by 61 percent from 1980 to 2014. But nearly $7 out of every additional $10 went to those in the top tenth of the income scale.
Inequality has soared over that period. In 1980, the researchers found, someone in the top 1 percent earned on average the equivalent of $428,200 a year in 2014 dollars — about 27 times more than the typical person in the bottom half, whose annual income equaled $16,000. By 2014, the average income of half of American adults had barely budged, remaining around $16,000, while members of the top 1 percent brought home, on average, $1,304,800 — or 81 times as much. That ratio, the authors point out, "is similar to the gap between the average income in the United States and the average income in the world's poorest countries, the war-torn Democratic Republic of Congo, Central African Republic and Burundi."
"It confirms the surge in income at the top," said Raj Chetty, an economist at Stanford unaffiliated with the project. “And it shows government redistribution doesn't really change the picture."
Lawrence Katz, an economist at Harvard who also independently reviewed the research, agreed that the data underscored the inadequacies of programs that try to redress inequities after the fact.
Piketty, Saez and Zucman concluded that the main driver of wealth in recent years has been investment income at the top.