Striking it Richer: The Evolution of Top Incomes in the United States

Striking it Richer: The Evolution of Top Incomes in the United States (Updated with 2011 estimates). Emmanuel Saez, January 23, 2013

  • “During the Great Recession, from 2007 to 2009, average real income per family declined dramatically by 17.4%,1 the largest two year drop since the Great Depression. Average real income for the top percentile fell even faster (36.3 percent decline, Table 1), which lead to a decrease in the top percentile income share from 23.5 to 18.1 percent. Average real income for the bottom 99% also fell sharply by 11.6%, also by far the largest two year decline since the Great Depression. This drop of 11.6% more than erases the 6.8% income gain from 2002 to 2007 for the bottom 99%. The sharp fall in top incomes is explained primarily by the collapse of realized capital gains due to the stock-market crash. Aggregate realized capital gains fell from $895 billion in 2007 to $236 billion in 2009. Indeed, including realized capital gains, the top decile income share dropped from 49.7% in 2007 to 46.5% in 2009 while excluding realized capital gains, the top decile income share remained virtually constant from 45.7% in 2007 to 45.5% in 2009.”
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