In 1926, F. Scott Fitzgerald wrote that the rich “are different from you and me,” and Ernest Hemingway supposedly retorted, “Yes, they have more money.” The recent recession didn’t change things much.
Economists Thomas Piketty and Emmanuel Saez have been documenting for nearly a decade just how much more money the rich have than the rest of us. The chart below, drawn from our analysis of Piketty and Saez’s most recent update, shows that incomes fell sharply among the highest-income 1 percent of American households in 2008 but remained highly concentrated, with the top 1 percent receiving 21 percent of the nation’s total pre-tax income. That’s among the highest percentages since Fitzgerald’s Roaring Twenties.
It remains to be seen whether the top 1 percent’s disproportionate income growth will return as the economy recovers, as it did after the dot.com collapse and subsequent 2001 recession (see chart below). Saez notes that historically, income concentration tends to bounce back after economic downturns unless major policy changes — such as those enacted during the New Deal — occur.
So it wouldn’t be surprising if the Great Recession proved to be just another speed bump on the road to even greater concentration of income at the top.