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Richest 1 percent earn biggest share since '20s

By Paul Wiseman

AP Economics Writer

LAST UPDATED: 10:50 a.m. HST, Sep 10, 2013

WASHINGTON » The gulf between the richest 1 percent and the rest of America is the widest it's been since the Roaring '20s.

The very wealthiest Americans earned more than 19 percent of the country's household income last year -- their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.

U.S. income inequality has been growing for almost three decades. And it grew again last year, according to an analysis of Internal Revenue Service figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of them, Berkeley's Emmanuel Saez, said the incomes of the richest Americans surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.

In 2012, the incomes of the top 1 percent rose nearly 20 percent compared with a 1 percent increase for the remaining 99 percent.

The richest Americans were hit hard by the financial crisis. Their incomes fell more than 36 percent in the Great Recession of 2007-09 as stock prices plummeted. Incomes for the bottom 99 percent fell just 11.6 percent, according to the analysis.

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

The top 1 percent of American households had pretax income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.

The gap between rich and poor narrowed after World War II as unions negotiated better pay and benefits and as the government enacted a minimum wage and other policies to help the poor and middle class.

The top 1 percent's share of income bottomed out at 7.7 percent in 1973 and has risen steadily since the early 1980s, according to the analysis.

Economists point to several reasons for widening income inequality. In some industries, U.S. workers now compete with low-wage labor in China and other developing countries. Clerical and call-center jobs have been outsourced to countries such as India and the Philippines.

Increasingly, technology is replacing workers in performing routine tasks. And union power has dwindled. The percentage of American workers represented by unions has dropped from 23.3 percent in 1983 to 12.5 percent last year, according to the Labor Department.

The changes have reduced costs for many employers. That is one reason corporate profits hit a record this year as a share of U.S. economic output, even though economic growth is sluggish and unemployment remains at a high 7.2 percent.

America's top earners tend to be highly paid executives or entrepreneurs -- the "working rich" -- instead of elites who enjoy lives of leisure on inherited wealth, Saez wrote in a report that accompanied the new analysis.

Still, he added: "We need to decide as a society whether this increase in income inequality is efficient and acceptable."

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entrkn wrote:
not acceptable
on September 10,2013 | 10:56AM
HealthyandHappy wrote:
hope and change
on September 10,2013 | 12:02PM
calentura wrote:
Imagine that. People can become wealthy in this country.
on September 10,2013 | 11:05AM
Kuniarr wrote:
Another worthless baloney concerning the wealthy.
on September 10,2013 | 11:06AM
AhiPoke wrote:
The divide between rich and poor is clearly a problem. In my opinion the appropriate question is, what got us to this point. If you study the issues one of the most significant is the number of people with below standard educations. The US now ranks significantly low in education, compared to the rest of the world, at the same time where we've become a nation living on handouts. It's the chicken and egg debate but I believe that as long as our schools under perform and our society gets more dependant on handouts we will never bridge this income gap. Those amongst us that are willing to better themselves and work hard to do so will join the 1 percent while those unwilling to educate themselves and work hard will continue to decline.
on September 10,2013 | 11:40AM
mcc wrote:
A big part to this are the banks that are owned by the rich people, and are allowed to prey on poor people and charge unbelievable rates and charges and fees to customers. Usury laws need to be re-imposed to protect them.
on September 10,2013 | 11:52AM
oahuresident wrote:
Banks are almost all large corporations owned by shareholders, which include most people that have IRAs, 401Ks, or government or union pensions that invest their money in the stock market. Bank interest rates are actually very low. The companies that should be outlawed are the check cashing companies and payday loan companies that prey on the working poor.
on September 10,2013 | 12:08PM
Kahu Matu wrote:
No, people should be held accountable to spend what they can afford. Cut credit and make the fees higher so that people would learn the value of a dollar and not how to pass the debt onto the next low interest credit card. The debt spending by families needs to end.
on September 10,2013 | 02:04PM
oahuresident wrote:
Early agrarian societies, including the Hawaiian Kingdoms, had a peasant class and a nobility. The nobility extracted tributes from the peasants to support lavish lifestyles while the peasants essentially were left with just enough to survive. Current capitalist societies have a working class that is much better off relative to the so called 1%. That is because capitalism suffers not from a lack of goods but from a lack of sufficient markets for goods. All depressions and recessions results from drops in market demands for the tremendous output of goods that capitalism is able to produce. It is therefore highly desirable for the working class to have relatively high incomes, and the poor provided with subsidies such as welfare and unemployment, so that they can buy and use the excess of good produced by a highly efficient capitalist system.
on September 10,2013 | 11:53AM
primowarrior wrote:
The ultra rich don't care. They just want more money. After they bleed this country dry, they'll just take their money and move to greener pastures.
on September 10,2013 | 12:01PM
oahuresident wrote:
I guess you have no desire for more money and are not interested in working harder to make more money. Does it make sense for rich people making money to "bleed the country dry" when it is in their interest for the country to do well so that the inhabitants keep buying the homes, cars, appliances, and other market goods produced by our capitalist society?
on September 10,2013 | 12:12PM
primowarrior wrote:
That's a nice vision you have there. Too bad it's not grounded in reality.
on September 10,2013 | 01:52PM
steelinhome wrote:
More of class-warfare. I won't begrudge those with more possessions than me; it's their stuff, not mine. Coveting is a SIN.
on September 10,2013 | 12:09PM
eoe wrote:
Luke 16:19-25 "There was a rich man who was dressed in purple and fine linen and who feasted sumptuously every day. And at his gate lay a poor man named Lazarus, covered with sores, who longed to satisfy his hunger with what fell from the rich man's table; even the dogs would come and lick his sores. The poor man died and was carried away by the angels to be with Abraham. The rich man also died and was buried. In Hades, where he was being tormented, he looked up and saw Abraham far away with Lazarus by his side. He called out, 'Father Abraham, have mercy on me, and send Lazarus to dip the tip of his finger in water and cool my tongue; for I am in agony in these flames.' But Abraham said, 'Child, remember that during your lifetime you received your good things, and Lazarus in like manner evil things; but now he is comforted here, and you are in agony.
on September 10,2013 | 12:38PM
eoe wrote:
Sounds like Jesus disagrees with you.
on September 10,2013 | 12:39PM
calentura wrote:
Does a penniless criminal get to heaven more likely than a wealthy philanthropist..? I suggest that qualities of the heart, including compassion, kindness, generosity, intention, etc. are much more important that monetary status. Some wealthy people have wonderful hearts and suffer tremendously just observing the vast ignorance in this world.
on September 10,2013 | 04:25PM
eoe wrote:
Even pointing this out is communist. /sarc
on September 10,2013 | 12:36PM
CriticalReader wrote:
Chicken and the egg issue regarding the facts this article points out and socialism/communism. Is it communist/socialist to point this stuff out, or does it LEAD TO communist/socialist type thought to talk about this stuff. Facts are facts. Would you rather these facts be swept under a rug? Do you dispute the accuracy of the facts asserted? And, here's another fact: history has not been kind to the kind of factual circumstances discussed in the article.
on September 10,2013 | 02:41PM
tigerwarrior wrote:
In my opinion, I believe that we've gotten to the point where even if someone could demystify this chicken and egg causality dilemma and find a amicable solution to the income disparity that is irrefutable--we are reminded of the proverbial nail that sticks out gets hammered down axiom. Case in point: The Occupy Wall Street movement, which will be 2 years old next week, has stood by their mantra, "We are the 99%", and made income disparity their calling card. Yet despite their peaceful and thought provoking message, they have been closely monitored by the Department of Homeland Security and the FBI.
on September 10,2013 | 06:41PM
Maneki_Neko wrote:
Now, relate this to Hawaii real estate. Bingo.
on September 10,2013 | 01:47PM
IAmSane wrote:
The US has one of the highest, if not the highest, income inequality in the western world.
on September 10,2013 | 04:39PM
Nevadan wrote:
Thanks to Obama's bailout of Wall Street, which got us in trouble in the first place. If the bailout went to the middle class who got him into office, it would be a different story today.
on September 10,2013 | 07:00PM
HD36 wrote:
Whenever the governmnt prints money to create inflation, the richest profit the most because they get their hands on it first.
on September 11,2013 | 07:05AM
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