Recession Hurt The One Percent, Yet The Wealth Gap Remains Huge

The recession was hard on everyone, even the one percent. Just not enough to put too large a dent in the overall wealth gap.

Income for the very highest earners in America, or the "one percent" whom the Occupy Wall Street movement has expended so much energy protesting, dropped noticeably between 2007 and 2009, when shocks seized the financial industry and the U.S. economy rapidly contracted. By 2009, one percenters were taking home 17 percent of the country's income, compared with 23 percent just two years before, The New York Times reports.

Hard times are relative, though. Even as the one percent saw their income dwindling in 2009, their net worth was still more than 200 times higher than that of the median household, according to the Economic Policy Institute.

The earning power of the one percent has been a subject of heated debate since the ascent of Occupy Wall Street, whose participants often cite income inequality as one of the most pressing problems in America. With the national economy struggling to gain momentum, and millions of people hard-pressed just to afford basic household necessities, critics of income inequality have been asking why some in America need to earn so much while others have so little.

Despite concerns about the growing wealth gap, the wealthiest Americans were worse off just like everyone else by 2009, after a recession that hit the financial sector hard. The average income of the one percent fell to $957,000 from $1.4 million in 2007.

But that's not to say the wealth gap closed. In fact, a report from the EPI asserts that the gap grew even larger during the Great Recession, likely as a result of skyrocketing unemployment and plunging home values.

Households in the one percent had a net worth in 2009 that was 225 times higher than that of the median household -- the highest that ratio has ever been.

Today, the annual median wage is just $26,364, meaning that half of households earn less than that. There are at least 46 million Americans in poverty, possibly more. One person in every five is struggling to put food on the table.

Meanwhile, the rich haven't bounced back entirely -- analysts believe that incomes for the top one percent are likely still lower than they were before the recession -- but the NYT notes that strong Wall Street performances in 2010 probably helped the one percent recoup some of their 2009 losses.

In general, the past 30 years have been a time of historic divergence between the rich and the poor. Wages for the bottom 99 percent have risen only modestly since 1979, but wages for the one percent have almost tripled in the same period, leading to a wealth gap that one economist has described as "Gilded Age levels of inequality."

CORRECTION: An earlier version of this post misstated that the U.S. median income is $26,364. The U.S. annual median wage is $26,364.

 

Comments

[takecourage]

10:23 AM on 12/16/2011

"hurt" is a relative term.

[hmargret]

09:08 PM on 12/14/2011

Love that hat.
how about we put 99% signs on our cars?

[Fred Bronson]

07:37 PM on 12/14/2011

They keep telling me how lucky i am, you are working, paying taxes, and health care.
First i was making more 15 years ago.
Then they say we are going to send the factories to china and you will pay less, BUT America will lose 20,000,000 jobs thus putting people on the unemployment line, and later welfare, so i have something to use my tax dollars for.
Then they say we are going to stop deporting hispanics here illegally it is cheap labor, BUT again they forgot to tell us we are going to lose more jobs, are taxes are going up to pay for them to have children, and food stamps, along with my health insurance is going up to help pay for the illegalls to have free health care, since they are, are guess.
What part of how lucky do i not understand i am?????
frederick bronson nc

[CMontalvo]

03:35 PM on 12/14/2011

"...critics of income inequality have been asking why some in America need to earn so much while others have so little."

It isn't that some NEED to earn so much. Presumably, no one NEEDS to earn more than what it takes to feed, clothe, protect and shelter you and your dependents. This statement presumes that those who earn ANYTHING more than that should need to JUSTIFY their excess income.

Instead, folks should be asking why the poor earn SO LITTLE! Does a dysfunctional public education system have anything to do with it? Do legions of HS grads who are functionally illiterate have anything to do with it? Do the highest dropout rates in history (50% in LA Unified) have anything to do with it? Does the lowest savings rate and highest credit card indebtedness in history have anything to do with it? Does a failure to recognize that globalization, for all its virtues (for a listing, consult progressive hero Paul Krugman), requires that we must compete with other countries' workers who also hunger for a middle-class lifestyle have anything to do with it?

The wealth gap largely reflects a skill gap and the solution isn't to emulate Robin Hood, stealing from the rich and giving to the poor. It's to get the poor to EARN a higher standard of living. Like the famous Pogo quote, the poor should be saying, "We have met the enemy and he is us."

[hmargret]

09:11 PM on 12/14/2011

it might look like we're our own enemy, but the middle and upper middle class wealth was invested in real estate, which the financiers destroyed with the bubble. HUD helped.
The rage is over the loss, permanent for many, of their assets.

[CMontalvo]

11:34 AM on 12/15/2011

The real estate wealth was created by real estate bubble which the financiers and exuberant home buyers jointly created. It was destroyed as all financial bubbles are, simply unable to sustain itself. So while many are angry over their perceived "loss", most of that loss was an artificial gain to begin with.

Those who experienced REAL losses were those who got into the market or upgraded in the midst of the bubble and those who foolishly used their artificial equity as "found money". Those folks lost REAL wealth.

[bzimmerman]

02:46 PM on 12/14/2011

As I've posted before, $1,000 for me is more than a months income. For a millionaire, assuming he works 40 hours a week, it is 3 hours income!

I can not feel sorry for someone with a million dollars or more. I could live on a million dollars for 100 years!

[Kylie Smith]

08:08 AM on 12/14/2011

Whoever wrote this...Alexander Eichler....this article was a huge waste of time and about the dumbest article I've seen HuffPost Business for awhile. Of course everyone was affected, but your article basically says common knowledge...the 1% still made an a**-ton more money than everyone else.

Write something that matters, please. That's five minutes of my life and now 30 seconds to leave this comment, that I'll never get back.

[Kiffanik]

08:00 AM on 12/14/2011

Well duh. Poor people are still as poor as they were, the wealthy are still wealthy. It's the middle class that gets repeatedly screwed and has for decades. We're footing the bill for the wealthy tax cuts which have created no jobs, taken revenue away that could be used for infrastructure investment, and added trillions to the deficit. We're also bearing the burden for low income programs and services.

It's time to get real, in a country that doesn't manufacture a lot, there are few opportunities for adequately paying jobs for those with just a hs diploma or less which is most of our population. The days of a 19 year old with no experience makin 100k as a loan officer are done. Those were bubble jobs not innate to our economy, the result of a Monopoly game by the finance and housing sector. We need to be looking at job creation in long term industries.

[Penocea]

06:38 AM on 12/14/2011

"The earning power of the one percent has been a subject of heated debate since the ascent of Occupy Wall Street, whose participants often cite income inequality as one of the most pressing problems in America."

Income inequality is a big problem for Socialists, Communists and Progressives. However, a recent poll shows that the country is more concerned with Big Government expansion then they are with Big Business.

http://www.gallup.com/poll/151490/Fear-Big-Government-Near-Record-Level.aspx?utm_source=alert&utm_medium=email&utm_campaign=syndication&utm_content=morelink&utm_term=Business%20-%20Politics

As for the 1% paying their fair share (legal plunder) ....

http://www.nypost.com/p/news/local/thanks_lot_to_the_e7GGP2aPLhaW0yESCrknEJ?utm_source=SFnewyorkpost&utm_medium=SFnewyorkpost

[TheMilesHome]

08:43 AM on 12/14/2011

You set up a false equivalency in your second paragraph. You equated Big Business with Income Inequality. Nothing could be further from the truth. Where does your Gallup poll even mention income inequality?

And yet I couldn't agree more with the poll itself. Of course more people are concerned with Big Government than with Big Business. Except progressives and regressives are concerned with different types of Big Government. Please find me a progressive that agrees that a Government official should be concerned with same-sex marriage, a woman's control over her body or that an American should be detained indefinitely at the whim of the President. Please show me a progressive that hates Big Business. I am a Capitalist. Probably more-so than the previous administration.

What I did find fascinating and will use in my arguments with conservatives moving forward, is how relatively small the disdain for Labor Unions is compared to Big Business. Interesting, to say the least.

As far as the second citing. Using the New York Post for anything more than a gossip column is a bit disingenuous. Although I did see that national 50% that pay no income tax dwindles down to 33% in a very progressive city like New York. I'll be using that tidbit too.

Thanks for the tips.

[Eserve1]

05:30 AM on 12/14/2011

I feel for them, I really do (cough)not(cough).

[ninja108]

03:36 AM on 12/14/2011

The disparity of income between the wealthy vs the poor is outrageous during this time of our economic situation. The Bush's Tax Cut for the wealthy didn't do nothing but make matters worst by allowing the wealthy to have a tax break while the middle class or the working poor had to pay more in taxes. Then we have politicians in Congress as well as the Senate who keep making excuses why they shouldn't tax the rich even more. Give me a damn break.

The Bush's Tax Cut wasn't paid for to give the wealthy their advantage. Not to mention the wars going on in Afghanistan & Iraq that put our country in an economic down fall with the banks getting beside themselves by giving out risky loans knowing these loans were bound to fail for homeowners around the country. Once an individual or a group individuals made a mess, they're responsible to clean up the mess & admit their accountability for causing the mess. Our economic disaster didn't happen over night it was a drawn out plan that was bound to happen due to greed & corruption.

[oneofthebest]

04:11 AM on 12/14/2011

Your ignorance is astounding. You are a mimic of every Democratic talking point. The Bush tax cuts went down to incomes in the $40,000 levels. They weren't only for the rich, but you believe your Dem talking heads. The wars, the banks, etc., all show a total lack of intelligent, critical thinking.

[ninja108]

03:27 AM on 12/14/2011

Okay, the wealthy income decline between 2007 - 2009, while the middle class & working poor saw a 23% declined in their income bracket during the same period. If a wealthy family saw their income declined from 1.4 million dollars per year to $975,000 per year, most likely that family is still living the high life with no desperate need or psychological effects, while the middle class income family or working poor family is twice affect by their household income declining because going from $80,000 per year to $50000 per year or $50,000 per year to $37500 per year make a difference.

Most wealthy people having other investments with their income can survived the best way they can but most middle class income or working poor families who have little investments don't have the luxury to survived once their income is declining. Some of these families might have to dipped into their investments just to make ends meet on a monthly basis. Imagine a family having a income of $125,000 per year (Husband = $75,000, Wife = $50,000) then the husband may lose his job, unemployed for 6 to 8 months then get another job similiar as his previous job only making $45,000 per year. That family have just seen a drastic decline going from $125,000 per year to $95,000 per year. That family had just went through hard times as well as making drastic financial decision during the husband's unemployement months to working again.

[oneofthebest]

04:24 AM on 12/14/2011

Well yeah, maybe that doctor or lawyer making 1.4 mil saw his income drop by over $500,000 may be just in ths same kind of boat. He may gave a mortgage of $1 mil or more on his big house that has now declined so much in value that he's under water and can't sell it. He may have huge car payments on fancy cars that he can no longer afford. He may not be able to continue to send his kids to the private schools they go now. I know you saying, so what, who cares, but my only point is that these tough economic times affect us all...it's all just relative. So stop hating them and feeling sorry for yourself.

[Tammy Tyler Palmisano]

03:20 AM on 12/14/2011

when the middle crumbles and the bottom falls out there is no place for whats on top to go but down...

[John Goucho]

02:56 AM on 12/14/2011

A shift of 5% of the country's income in a two year period for 1% is a massive shift in income. It is in fact a reduction of 1/3 of the average income of the people in the top 1%. In fact, as pointed out in the actual article, it returned income differential to the times of the 1990's during the Bill Clinton era and when nobody was complaining about it.

Yet, Huffpost continues to make class warfare with it's reports and editorial board distorting the NYTIMES article to suit it's own political objectives. Stunning the lack of integrity of this publication.

[FWJames123]

12:59 AM on 12/14/2011

Where is the source for a median household income level in the 23,000s for 2011. Neither the census bureau nor HUD report 2010 or 2011 levels that low. HUD puts the figure for the US at 64,000 and the census bureau puts it at 49,445. Is this reporter reporting facts or just winging it for the ratings?

[dawgspiel]

01:33 AM on 12/14/2011

http://blogs.reuters.com/david-cay-johnston/2011/10/19/first-look-at-us-pay-data-its-awful/

It appears Eichler is confusing the median income for individuals, which did stand at about $26,000 last year with household income, which are the numbers you cite. Most households today have 2 or more people working, which explains the discrepancy. Still some slipshod reporting, however. Both figures are awful, but Mr. Eichler hurts his credibility by confusing the two numbers.

[Genders]

11:34 PM on 12/13/2011

Oh please, you did not even include capital gains where the rich make 75% of their money.