Thanks in part to Occupy Wall Street, when people talk about inequality these days, they're typically referring to the extent to which the top 1 percent have pulled away from the bottom 99 percent. I have previously expressed skepticism not about whether this has happened but about the magnitude of the increase in high-end inequality. Over time, my skepticism has eroded, though I still believe that interpreting the figures that are commonly cited is complicated. I'll use this post to start taking you behind the numbers you see all over the place about the top 1 percent.
The first thing to point out is that if marketing were no issue, a case could be made that Occupy Wall Street's slogan should be, "We Are the 99.5%!" The following chart shows that if you are in the top 10 percent of incomes, you command more of the income received in the U.S. today than your counterparts in the past. But unless you are in the top one-half of one percent, the increase has not been startling. If you look at the actual income shares that are behind the numbers in the chart, tax returns in the top one percent but not in the top one-half of the top one percent accounted for 3 percent of income in 1960 and 4 percent in 2010. If you were in the top five percent but not the top one percent, your share increased from 12.5 percent of income to 16 percent. These are not increases to inspire urban camping.