It’s all but impossible to dispute: Extreme wealth is growing in America. The top 1 percent accounted for less than 10 percent of total earned income in the 1970s. By the end of 2012, they held more than 20 percent, according to Emmanuel Saez, a professor at UC Berkeley. What’s more, between 1993 and 2012, the top 1 percent saw their incomes grow 86.1 percent, while the bottom 99 percent saw just 6.6 percent growth, according to Saez’s research.
Wealth is not necessarily a bad thing. People with more money could spend it on goods and services that help employ people at the bottom. But do they? And why do gains for workers at the top seem to come at the same time that it is becoming harder for everyone else to see their wages increase?
Generally, economists have found that it is becoming increasingly difficult to move up to a higher income bracket during the course of a career: If you start off as a low-income earner, you’re more likely to stay there. But no one is yet sure why.
A new paper from the left-leaning Roosevelt Institute takes a look at why workers are having a harder time climbing the income ladder—something I’ve written about before—and argues that there is a correlation between the rich getting richer and everyone else getting left behind. The paper, authored by Mike Konczal and Marshall Steinbaum, finds that people aren’t able to move up the career ladder because demand for workers has decreased, in large part because there are fewer businesses being formed and expanding.