The June Federal Reserve Bulletin reports the results of the latest Survey of Consumer Finances. The data cover the decade 2001-2010. Unsurprisingly, the report is not happy reading.
In the first ten years of the twenty-first century median household income has fallen from $49,400 to $45,800, a drop of 7.29 percent. The percentage of households with any savings at all has dropped from 59.2 percent to 52.0 percent.
Young people have fared even worse. The median income of households headed by people under 35 years old has dropped precipitously, from $40,900 to $35,100.
And it’s not just a matter of the poor getting poorer. Even households headed by people with college degrees have experienced falling incomes, from a median income of $83,100 in 2001 to a median income of $73,000 in 2010.
You don’t even want to know what households headed by high school dropouts take home (a median of $23,000 a year, meaning that half make less than that).
All figures are real 2010 dollars, adjusted for inflation.
America suffered a pretty severe recession in 2007-2009, but it’s not as if the economy hasn’t grown in the twenty-first century.
In fact, U.S. real national income per capita grew 6.33 percent between 2001 and 2010, according to figures from the Bureau of Economic Analysis. That’s slow, but it doesn’t account for declining household incomes.
The discrepancy also is not explained by changes in household composition. Expressed in terms of real national income per household, the U.S. economy grew by 5.94 percent between 2001 and 2010.
In other words, if American national income in 2010 were distributed to people and households in the same proportions as it was in 2001, the median household would now be about 6 percent richer, not 7 percent poorer.
Where has all the money gone? Again the answer is no surprise. It’s gone to the very rich. Not the merely rich. The very rich.
The Federal Reserve data show that even among the top 10 percent of households in America, median income declined between 2001 and 2010. The merely well-off have seen no increase in income in twenty-first century America. All of America’s economic growth now goes to the super-rich.
The incomes of the super-rich don’t show up in surveys like the Federal Reserve’s Survey of Consumer Finances because there just aren’t enough super-rich people to be found in a survey sample. The super-rich do, however, pay taxes (sometimes). Research based on Internal Revenue Service data shows where the money has gone.
The World Top Incomes Database uses IRS data to compute average real incomes for tax-filing households. Figures are available for all households, the top 10 percent, the top 1 percent, and even the top 0.01% of households.
Like the Federal Reserve data, the World Top Incomes Database shows that the median income of the top 10 percent of American households stagnated between 2001 and 2010. The Fed data show a 1 percent decline while the WTID data show a 1 percent rise. The Fed data include realized capital gains while the WTID data do not.
The Fed data stop at the top 10 percent. Because it’s based on tax returns, not surveys, the WTID data go higher. For the top 1 percent of American households, median income increased only 2.53 percent between 2001 and 2010, according to the World Top Incomes Database.
Any increase is better than a decline, but a 2.53 percent total gain over 10 years is nothing to write home about. That’s just a fraction of a percent each year. Even for typical top 1 percent Americans, incomes has been essentially stagnant since 2001.
To find rising incomes, you have to go to the top. The very top. For the top 0.01 percent of tax filing households — that’s the top 1 in 10,000 — incomes rose an average of 29 percent between 2001 and 2010.
In other words, for roughly 300 million Americans incomes have been basically stagnant in the twenty-first century. Some have done well and some have done poorly, but overall there’s been no change. One person’s gain has been another person’s loss.
But for 30,000 or so very wealthy Americans, the twenty-first century has seen consistently rising incomes beyond the dreams of previous generations.
Twenty-first century America has been called “the new gilded age.” Gilding is the process of applying a thin, shining layer of gold on top of a thick, dull base metal. The metaphor perfectly matches the character of the contemporary American economy.
The beginning of the twenty-first century truly is America’s new Gilded Age.