Who are the 1 percent?
This post has been updated.
Occupy Wall Street says their movement represent the “99 percent” of Americans who’ve been left behind, while a tiny minority of wealthy earners pull ahead. So who are the 1 percenters?
Taken literally, the top 1 percent of American households had a minimum income of $516,633 in 2010 — a figure that includes wages, government transfers and money from capital gains, dividends and other investment income.
That number is down from peak of $646,195 in 2007, before the economic crisis hit, all adjusted to 2011 dollars, according to calculations by the Tax Policy Center. By contrast, the bottom 60 percent earned a maximum of $59,154 in 2010, the bottom 40 percent earned a max of $33,870, while the bottom 20 percent earned just $16,961 at maximum. As Annie Lowrey points out, that gap has grown wider over time: “The top 1 percent of households took a bigger share of overall income in 2007 than they did at any time since 1928.” (And in New York City, it’s even more skewed: the top 1 percent have an average of $3.7 million in income.)
When you look at the disparity in net worth, things look even more skewed. Wealthier Americans have assets — in home equity, stocks and other investments — that generally outstrip their cash income. Average wealth of the top 1 percent was almost $14 million in 2009, according to a 2011 report from the Economic Policy Institute. That’s down from a peak of $19.2 million in 2007.
By contrast, the poorest households were experiencing declines in net worth even before the recession hit. In 2007, the bottom 20 percent of households had an average (negative!) net worth of –$13,800 in 2007, which fell further to –$27,200 in 2009. Altogether, “average wealth of the bottom 80 percent was just $62,900 in 2009 — a dropoff of $40,900 from 2007,” EPI writes. That means the wealthiest 1 percent held an average of 225 times the wealth of the average median household in 2009 — a ratio that was 125 in 1962.
Interestingly, just as Occupy Wall Street is bringing their grievances about this growing gap to a broader public, the Democratic Party is re-adjusting it’s definition of “rich.” As my colleague Lori Montgomery reports, Senate Democrats have ditched President Obama’s plan to raise taxes on households who have more than $250,000 a year for a proposal to tax those who earn more than $1 million a year. Those who have a household income of $250,000 wouldn’t fall in the top 1 percent. But those who have incomes of more than $1 million would — at least outside New York City.
*Update: This post was updated to clarify that the second and third paragraphs describe income floors — the mininum amount at different percentiles — not average income. The average income of the top 1 percent of US households in 2011 is $1,530,773, while the average income of the bottom 20 percent is $9,187, and the median income is $65,357, according to Jim Nunns, a senior fellow at the Urban Institute.