America’s Lost Century Continues

Sometimes a headline writer can get carried away. Way away.

“Paychecks hit high for middle class,” shouted out the front-page headline of this morning’s Washington Post print edition.

In fact, “paychecks” in the United States — the wages workers receive for their labor — are not rising, as the actual article under the Post front-page headline makes clear. The U.S. Census Bureau’s just-released latest annual report on American incomes, that article notes, furnishes “little evidence that employers are rushing to offer raises to those who already are employed.”

In 2016, the new Census stats show, the take-homes of America’s full-time workers ended up “not statistically different” from their 2015 levels. Take-homes, overall, remain essentially stagnant.

America’s median — most typical — household incomes, on the other hand, did rise in 2016, in large part because over 2 million people shifted from part-time to full-time work. Median incomes have now risen two years in a row, to $66,487 for non-elderly households. But this increase, the Economic Policy Institute points out, still leaves typical household incomes down since the start of the century. Non-elderly household incomes, since 2000, have dropped 4.9 percent.

What’s been increasing? The incomes of America’s affluent, the latest Census figures show, are pulling away from the rest of the nation. In 2016, households in the top 5 percent saw their incomes increase over twice as fast as households in the bottom 20 percent.

Since 2000, after adjusting for inflation, top 5 percent average incomes have jumped from $351,903 to $375,088. Bottom 20 incomes, by contrast, averaged $14,161 in 2000 and then only $12,943 in 2016.

What about the top 1 percent? Census Bureau researchers make no effort to track the incomes at America’s economic summit. We have to look elsewhere — to tax data, for instance — to get a fuller sense of how unequal the United States has become.

Economists like Thomas Piketty and Emmanuel Saez have been doing this looking ever since the 21st  century began. But even tax records have flaws. They’re becoming particularly less accurate yardsticks for income as super-rich taxpayers conceal more and more of their wealth in offshore tax havens.

One key collaborator of Piketty and Saez has, fortunately, been working diligently to track those hidden offshore billions. This ace statistical sleuther, Gabriel Zucman of the University of California at Berkeley, has just co-authored new research that gives us the clearest picture yet of how much income and wealth is concentrating in the pockets of our global richest.

Earlier Zucman research had estimated that 8 percent of the world’s household financial wealth is sitting offshore in tax havens. The vast bulk of the income that wealth throws off goes untaxed — and unrecorded in national income distribution figures.

Zucman’s newly published research, conducted with scholars from Norway and Denmark, factors into national statistics the wealth hidden away in tax havens. The top 0.1 percent globally, the research calculates, now holds nearly 80 percent of offshore wealth. The top 0.01 percent share? A little over half of all offshore wealth.

What happens when we incorporate this offshore loot into figures for national wealth distribution? The top 0.1 percent share of America’s household wealth ratchets up from 19.1 to 21.1 percent.

Some perspective: Back in 2000, Zucman and his colleagues estimate, America’s top 0.1 percent held just 15.6 percent of the nation’s household wealth, after taking tax-haven holdings into account. The current top 0.1 percent wealth share now nearly triples the 7.9 percent share of American household wealth the top 0.1 percent averaged back in the 1970s.

The top 0.01 percent, meanwhile, as of 2014 held 11.2 percent of household wealth in the United States, once we factor in offshore wealth. That share has jumped up from 6.9 percent in 2000 — and quadruples the 2.6 percent share of America’s wealth the top 0.01 percent held throughout the 1970s.

One cheery thought to keep in mind as we contemplate all these numbers: The first few years of the 20th century saw plutocracy on the same sort of roll we see now. But that plutocracy would essentially vanish by mid century. Our forbears became significantly more equal. We still could, too.

Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest book — The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 — traces how average Americans ended the nation’s original Gilded Age. Follow him at @Too_Much_Online.