Confirming what Occupy Wall Street protesters already knew to be the case, the Congressional Budget Office released a report on Wednesday demonstrating that the last three decades of economic growth have heaped rewards on the top 1 percent of earners, and few else.

The CBO report, titled Trends in the Distribution of Household Income Between 1979 and 2007, examines the change in the concentration of wealth in the last three decades, using 1979 and 2007 as bookends because both were followed by a recession; the report gives us a picture of what the growth paradigm of the Reagan-Bush-Clinton-Bush years did.

Defined by lower taxes, financial deregulation, access to cheap credit, the last few decades saw some real growth: 62% across the board, in after-tax income. Where that 62% went, though, is the story here. The top 1% of earners saw their income grow nearly three times: 275% to be exact. The middle class, meanwhile (defined as the 21st through 80th percentile) saw their wages grow slightly less than 40%.

“The major reason for the growing unevenness in the distribution of after-tax income,” the report explains, “was an increase in the concentration of market income…in favor of higher-income households.”

The report explains over the past three decades, the business income and capital gains represent a larger slice of the earnings pie; labor income and capital income’s share of the pie decreased. Compensated with a paycheck and not bonuses based on capital gains? Tough luck for you.

In all, every quintile except for the highest saw their share of the nation’s income decline from where it was in 1979, most by about two or three percentage points. Meanwhile, the top quintile’s share of income grew by 10%. And believe it or not, the top quintile’s growth was almost all focused in the hands of that wealthy 1%.

While the CBO takes no stance on the issue — they are non-partisan by definition — their analysis confirms exactly what Occupy Wall Street protesters have been pointing out: the top 1% of earners take home way too much wealth, and that comes at the expense of all other earners. The report demonstrates this fact quite clearly, in an entirely objective fashion.

Will the CBO’s nonpartisan bona fides make these facts about the top 1% a more mainstream source of outrage? It’s quite different to hear news about income inequality from a qualified team of bureaucrats than from a crust punk with a sign on the street. We’ll have to wait and see if this report draws the mainstream attention it deserves. It couldn’t have come at a better time.

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  • Dan

    I’m struggling to understand how a different rate of real growth is somehow unfair. The pie grew for everybody. The USSR had equal division of a pie that never grew and look how miserable that was. It was during the last thirty years that millions of people became millionaires. What other country provides the opportunty to work hard and become rich? In the process income grew for everyone!

    • Anonymous

      But if you adjust for inflation, most people saw incomes stagnate or rise slowly (, while only the top earners saw real gains. They added little real value to the economy by making paper millions. So while the economy was growing, and prices along with it, the middle class had to go into debt to make up for wage stagnation. All the while, everyone was promised that the economy would continue to grow indefinitely, so risks like buying a home no money down weren’t really risky at all. 

      This all fell apart, and it’s easy to identify deregulation, and the income inequality that came with it, as the twin culprits. 

      By pointing out that our government’s regulatory policies have led to an unstable economic system, I’m not advocating for Soviet-style totalitarian communism. Market-based economies are much more effective than planned ones at creating prosperity. But that’s only true to a point. Regulation will help create more sustainable capitalism, not only by protecting Americans and the world from disastrous bubbles, but also by helping industries find environmentally sustainable solutions to our energy concerns, and protecting our natural resources from destruction.

      I could go on and on about this, but the point is simple: it’s not “unfair” to have a pattern of growth like this, but it doesn’t really work out that well for anyone.