We all know the basic story. A very high percentage of personal income growth is going to the top one percent. Which leaves little for the rest of us to enjoy a rising standard of living. The result is a decoupling between a growing economy and most American doing better economically. In many ways this is the great economic challenge of our times.
Nicholas Kristoff in a recent New York Times column highlights well the extreme nature of the concentration of income growth with this hard to imagine story:
It turns out that the Wall Street bonus pool in 2014 was roughly twice the total annual earnings of all Americans working full time at the federal minimum wage.
You read that right: Just the annual bonuses for just the sliver of Americans who work just in finance just in New York City dwarfed the combined year-round earnings of all Americans earning the federal minimum wage.
An interesting new study by the Economic Policy Institute (EPI) looks at the concentration of income growth by the one percent by state. Worth checking out. The data come from the IRS––the only data source for the top one percent. So the definition of annual income is a bit different than that used to calculate per capita income.
Although EPI found real differences between states, no state has avoided the trend of a very high proportion of income growth to the top one percent since 1979. This is a national reality and a national challenge. You can’t get a rising standard of living for most Americans if the benefits of economic growth are overwhelming going to a very small proportion of Americans.
Here are the headlines for Michigan:
Between 1979 and 2007 Michigan was one of only four states where only the top 1 percent experienced rising incomes and the average income of the bottom 99 percent fell.
Between 1979 and 2007 average real income in Michigan for the top one percent grew 100 percent compared to 200 percent for the nation. For the bottom 99 percent average real income in Michigan fell by 0.2% compared to growing by 18.9 percent nationally.
From the end of the Great Recession through 2011 (latest available state data) average real income in Michigan for the top one percent grew 12.8 percent compared to 11.5 percent for the nation. For the bottom 99 percent average real income in Michigan grew by 0.2% compared to falling by 0.7 percent nationally.
In 2011 average income for the top one percent in Michigan was $707,446, for the bottom 99 percent it was $35,988. Compared to $1,040,506 and $42,694 for the nation.
