The radical increase in wage inequality

The Economic Policy Institute has crunched the latest SSA wage data, and placed it in context: the context being what’s been happening to American workers since the 1970s:

For those who were told there would be no math, if you’re in the bottom 90% of wage earners, you’ve seen wage growth of far less than 1% per year over the past 43 years. If you’re in the “upper middle class” (NYT Op Ed definition) things look very different.

Average wages in the 95th to 99th percentile have almost doubled, from $120K to $234K (all figures 2022 dollars). But this of course leaves out the real winners, which is what the top 1% looks like. Average wages there went from $289K in 1979 to $786K in 2022. But even this figure disguises the real driver of massive inequality, which are the wages of the top .1%, which increased an astounding 344%, going from $634K to $2.82 million.

And note that this is just wage income. Since people near the top of the pyramid own the vast majority of the equity capital in the USA — the top 10% of households own 85% of corporate stock owned by households — the growth in the value of American corporations has pretty much bypassed the 90% of the population that has seen barely any wage growth since the Carter administration.

Nothing reflects these trends more starkly than changes in CEO compensation at America’s largest companies:

Compustat,a financial database, tracks executive pay at all publicly owned US firms. In this data, inflation-adjusted pay for CEOs of the 350 largest publicly owned US firms grew 1,209% (not a typo) between 1978 and 2022. Further, the gap between CEOs and typical workers has grown dramatically over the last few decades. In 1965, CEOs were paid 21 times as much as the typical worker. By 2022, CEOs were paid 344 times as much as the typical worker.

The following point should really be the subject of another post, but one of the remarkable aspects of our political landscape is the extent to which the constant hysterical screeching from the plutocratic class, via its lackeys in academia, think tanks, WSJ editorials etc., about the supposedly socialistic redistributionist goals of the Democratic party is not merely false, but a literal inversion of reality.

The economic debate in America is between a party in favor of lightly regulated heavily financialized consumer capitalism, with some very modest income redistribution, sufficient — barely — to keep the losers in that economy from starving or freezing to death, and people who think of Manchester England in 1840 as a model for what America ought to look like in the 21st century.