The highest earners have amassed a growing share of total wages
Congress continues to trash Social Security without adding the “very” necessary requirement of greater inputs to support what was already there and now adding a new funding requirement. Democrats have passed on providing a solution to Social Security shortfall which appears to be increasing with new withdrawals. Not that one always has to have a safety fund in the background covering the next 20 years. It does make sense now with a Gov being manipulated by a trio of wealthy loons. As we speak, the fallback funding diminishes.
As we knew and now know, Trump and Republican’s 2017 tax break skewing heavily to a very small minority is not paying for itself with economic growth. It appears that Trump’s tax policy allows an elite class of equity fund managers, tech investors, and creators of the best bitcoin casino sites to feather their own nests. Meanwhile, the rest of the working population faces a shredding safety net and stagnant wages. This glaring economic factoid apparently was completely lost back in November 2024 when the general population was voting. Now we face the immediate threat of a massive, out-of-control federal deficit because nobody across the country knows if the original tax break is actually going to sunset in 2025.
Eric is promising spending cuts and more cheap energy.
To the over 2.5 million who did not vote for whatever reason, this played well in favor of Trump. For the bunch that favored a plethora of other presidential candidates. At least, you showed. It also played well for Trump who did not break 50% of the vote for the second time.
One winner in all of this is a small percentage of the population. Their increase in the percent of total wages increased. The bottom 90% decreased. Read on . . .
Wages inequality fell in 2023 amid a strong labor market, bucking long-term trends:
– by Elise Gould and Jori Kandra
The top 1% wages have skyrocketed 182% since 1979 while bottom 90% wages have seen just 44% growth
Key Findings
- Wage inequality fell in 2023 as inflation-adjusted earnings grew for the bottom 90% (+0.9%) while earnings declined for the top 5% (–2.0%), top 1% (–3.3%), and top 0.1% (–4.7%).
- For the entire pandemic business cycle between 2019 and 2023, earnings growth for the bottom 90% was more than twice as fast as for the top 5%.
- Over the long run, however, earnings growth has been vastly unequal. From 1979 to 2023:
- Wages for the top 1% and top 0.1% skyrocketed by 181.7% and 353.9%, respectively.
- Wages for the bottom 90% grew just 43.7%
- The top 1% earned 12.4% of all wages in 2023—up from 7.3% in 1979. The bottom 90% earned just 60.7% of all wages in 2023, far lower than their 69.8% share in 1979.
Wage inequality fell for the second year in a row in 2023 but still remains extremely high, according to our analysis of newly available wage data from the Social Security Administration (SSA).
Average real earnings mostly held steady in 2023 (–0.1%) as inflation receded, but there were significant differences across the earnings distribution. The bottom 90% experienced the only growth of any group in 2023 (+0.9%), while the top 5% and the top 1% experienced losses of 2.0% and 3.3%, respectively. Even the top 0.1% experienced real wage losses in 2023 (–4.7%). These losses are surprising given that pay at the very top tends to move with the stock market, which held steady in 2023.1 We found similarly puzzling findings among top CEOs.
Table 1 shows average annual earnings by wage group for each of the business cycle peaks since 1979, as well as for the last two years (in 2023 dollars).
Reference Source: for Chart: EPI analysis of Kopczuk, Saez, and Song, “Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data Since 1937” (2007) and Social Security Administration wage statistics.
Wage compression has been striking over the pandemic business cycle
This wage compression—faster growth at the bottom than the top—is similar to what we found in 2022 and in our analysis of hourly wage data.2 In fact, when we look over the entire pandemic business cycle from 2019 to 2023, we find substantial wage compression. Figure A shows that the bottom 90% experienced the largest gains of any group (+5.0%) while the top 0.1% experienced downright losses (–2.2%). This period was characterized by a deep—but short—recession followed by a tremendous labor market bounce back engineered by intentional policy decisions.
Source: EPI analysis of Social Security Administration wage statistics.
Over the long run, however, earnings growth has been vastly unequal (see Figure B). Between 1979 and 2023, annual earnings for the top 1% and top 0.1% skyrocketed by 181.7% and 353.9%, respectively, while earnings for the bottom 90% grew just 43.7%. On an annualized basis, wages for the bottom 90% grew just 0.8% per year, compared with 2.4% and 3.5% annualized wage growth for the top 1% and top 0.1%, respectively.
It’s worth noting that these vastly unequal growth rates are on top of the already vast inequality that existed in 1979. Back then, the top 1% earned average wages ($281,932) more than nine times as much as the bottom 90% ($29,953). In 2023, the top 1% earned average wages ($794,129) more than 18 times as much as the bottom 90% ($43,035).
Source: EPI analysis of Kopczuk, Saez, and Song, “Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data Since 1937” (2007) and Social Security Administration wage statistics.
The highest earners have amassed a growing share of total wages since 1979
Table 2 displays the share of total earnings garnered by each wage group in business cycle peak years between 1979 and 2023, as well as changes over the long term and in the pandemic labor market.
Given their higher earnings growth in recent years, the bottom 90% had a slightly higher share of earnings in 2023 than in 2019.
But in the long run, the highest earners have captured a growing share of total wages even relative to already substantial inequality that existed in 1979. The bottom 90% of workers earned only 60.7% of all wages in 2023, far lower than their 69.8% share in 1979. Meanwhile, the top 1% earned 12.4% of all wages in 2023, up from 7.3% in 1979. In other words, a group of workers that is 90 times as big in size earned less than 5 times as much in 2023 as the much smaller group.
Source: EPI analysis of Kopczuk, Saez, and Song, “Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data Since 1937” (2007) and Social Security Administration wage statistics.
Wage growth for the bottom 90% has lagged far behind average growth for much of the last 40-plus years. The data here support evidence from other data sources that show wages for middle-wage workers grew mainly in two other periods since 1979: the late 1990s and the five years leading up to 2019. It’s not a coincidence that these were two periods when policymakers allowed the unemployment rate to reach 4% (or lower) without slowing the economy in the name of inflation control.
Policymakers should heed this lesson and pursue full employment along with a host of other policies to curb rising inequality. This should include strengthening and enforcing labor standards such as those related to the minimum wage, the overtime threshold, and wage theft; increasing worker bargaining power by making it easier for workers to form unions; and reining in executive compensation with higher taxes, regulation, and better corporate governance.
Notes:
1. Stock options are included in the SSA wage data along with wages, salaries, commissions, bonuses, and severance pay.
2. In order to match Census methodologies, EPI has moved to using Chained CPI-U for inflation-adjustment; therefore, earnings levels are not directly comparable to earlier reports.