Ever feel manipulated by a politically-motivated media, or by a politician him/herself? The notion that the game is rigged in favor of the “rich” plays effectively these days from both sides of the aisle. Well, what if I told you that the recent outsized gains by the wealthy have much to do with timing and little to do with what conniving candidates might have you believe?
According to many observers, incomes have stagnated for most Americans since the Great Recession, while the rich get richer. This claim, however, is based on analyses that cherry-pick start and end dates to assess income growth: the top 1 percent of households see sharper income declines during economic downturns than everyone else, and the Great Recession was especially destructive.
An accurate accounting of who is gaining and losing in the U.S. economy requires a broad view across an entire business cycle: while the richest households tend to gain the most during economic expansions, this is partly because they also lose the most during recessions.
In the current, ongoing, business cycle, real incomes declined between 2007 and 2014; the top 1 percent experienced nearly half of that total decline.
From 1979 to 2007, 38 percent of income growth went to the bottom 90 percent of households, amounting to a 35 percent increase ($17,000) in its average income.
Even if one ignores the Great Recession and cherry-picks the expansion period of 2009–14, it is not true that all gains during the recent expansion have gone to the top 1 percent—in fact, only about half did.