Wall Street Protesters Hit the Bull’s-Eye
Occupiers of Zuccotti Park and other sites around the country have been criticized for the fuzziness of their goals. Their complaint that the privileged few in the top 1 percent are getting a disproportionate share of the nation’s prosperity, however, is spot on. And Wall Streeters are taking a bigger and bigger chunk of that income.
Who exactly are the people at the top? They are 1.4 million families that made on average $1 million in 2009, the latest data available. They took a hit from the 2008 financial crisis, but no doubt are regaining lost ground. The rich always do: a report published last week by the Congressional Budget Office shows that the share of national income going to the top percentage of households skyrocketed over the last three decades, even as it fell for the vast majority of American families.
The top 1 percent’s share of the nation’s total adjusted gross income was 17 percent in 2009, down from 23 percent two years before. But those people are still earning more than the entire bottom half of the population.
The first chart shows the share of national income that goes to families at different points of the income distribution. Since the mid-1980s the top 10 percent of Americans have increased their share at the expense of everybody else. But the lion’s share of these gains accrued to the richest 1 percent; and half of those gains went to the top 0.1 percent.
Wall Street financiers were always well paid. In the last three decades their representation at the very top of the income pyramid has grown by leaps and bounds. A recent study by two academic economists and a Treasury Department analyst found that financiers — bankers, fund managers and the like — account for about 14 percent of the taxpayers in the top percentile of income distribution. There are more non-financial business executives than bankers in this wealthiest slice of income. But their share of this slice fell over the past quarter century, while the financiers’ share grew substantially. Today financiers account for 16 percent of the income of the top percentile, up from 9 percent in 1979. Their share is now almost as big as that of lawyers and doctors combined.
It’s hard to believe today, but from the 1960s to about 1980 workers in finance made little more than those in the rest of the private sector, on average. Then, things changed: from the ’80s on, administrations from both parties embraced deregulation, undoing many of the rules put in place in the wake of the Great Depression to limit banks’ riskiest, and most lucrative, investments. Gone were the limits on interstate banking, down came the wall separating commercial and investment banks.
From 1979 to 2006, the financial industry’s share in the nation’s corporate profits grew from a fifth to almost a third. By 2006, bankers and insurers were making 70 percent more, on average, than workers in the rest of the private sector. Then they set off one of the worst financial crises in living memory, and taxpayers bailed them out.
The protesters’ grievances may be aimed at Wall Street as a metaphor for broader economic forces. But there is nothing metaphorical about who is taking home the wealth. The protesters might even aim a bit higher: the real income growth is happening in the top 0.1 percent. There are lots of bankers there, too.
© 2011 Eduardo Porter