My mother, a spry 95, is full of pithy sayings.   “Climbing the greasy ladder”, as a euphemism for career struggles, has always seemed particularly apt.   And also turns out to be accurate.

A bunch of smart folks have compiled longitudinal tax records from many countries, including the US.   (The “World Top Incomes Database” or WTID.)    This data paints a picture for incomes over time.  For the US, the best metaphoric picture I’ve seen is that of a ladder, with each rung representing an income group.   Over time, the income ladder has become stretched.   The bottom rungs are actually a bit farther off the ground.   Not much, but some.   The top rungs?   Much farther off the ground, and much farther away from all of the other rungs.

While the ladder has stretched, movement up and down the ladder has remained constant.   The rungs may be farther apart and the ladder might be taller, but the chances of moving up, or down, are still about the same.   The ladder is still greasy.  Just taller.

Executive Summary of NBER Working Paper 19844, January 2014, Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nicholas Turner

I do worry about the rising spread of incomes.   Something about having the top incomes increasingly far from the bottom ones does’t feel right.   But I worry most about maintaining movement on the ladder.   Creating and increasing chances for betterment.   Helping people at the bottom rungs continue to have the opportunity to climb up a taller greasy ladder.

 

General Overview

The Equality of Opportunity Project

Relevant Papers

2014.  “Inequality in the long run” in Science 23, May 2014 by Thomas Piketty and Emmanual Saez

2014.   “Is the United States Still a Land of Opportunity?   Recent Trends in Intergenerational Mobility” in the National Bureau of Economic Research by Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nicholas Turner

As a wise man said, if losing a donut makes you unhappy, don’t bet donuts.   But I’ll double down for a Boston Cream on this one:   Income inequality in the US is increasing.

• Since 1970, incomes for the top 1% have soared.   After-tax, before-tax, what-tax.

• The top 1% captures as much of the total US income as they did back in the Roaring 20’s.

• Between 1979 and 2007, the top 10% has captured 63.1% of all growth in income.   The top 1%?  A measly 38.3%.

See handy dandy charts below.   And see references farther below.

The geek in me notes that many things have changed since the Roaring 20’s.   Marginal tax rates have fallen from rates in the 80%.   Social services are much greater.   And life is, well, just different.   But in any event, it sure seems that the top 10%, and the top 1%, are farther away than ever.

“Average After-Tax Household Income”, from the Congressional Budget Office, June 2010        

 

“Income Inequality in the United States, 1913 – 1998” in the Quarterly Journal of Economics, 118, 2003 by Thomas Piketty and Emmanuel Saez.   Updated 2008.

 

Share of the total household income growth attributable to various income groups, 1979 – 2007

“Sources of Income for All Households, by Household Income Category, 1979 – 2007” from the Congressional Budget Office Average Federal Taxes by Income Group as complied in The State of Working America, 12^th Edition from the Economic Policy Institute

 

General Overview

The State of Working America

Economics Policy Institute

Historical Income Tables: Income Inequality, United States Census Bureau

Relevant Papers

2014: “A Guide to Statistics on Historical Trends in Income Inequality”, Center on Budget and Policy Priorities, by Chad Stone, Danilo Trisi, Arloc Sherman, and William Chen

2013: “Income Inequality: Evidence and Policy Implications” Arrow Lecture, Stanford, by Emmanuel Saez, UC Berkeley

2008:  “Income Inequality in the United States, 1913 – 1998” in the Quarterly Journal of Economics, 118, 2003 by Thomas Piketty and Emmanuel Saez.   Updated 2008.