Inequality: Mostly Among the 1%

Back on a topic that we have not covered in a while, income inequality.  We have looked at What it takes to be in Top 1%, Who Exactly are the 1%, and The Truth About the Wealthy.  But this article by Kiplinger isn't what you think.


The piece takes a look at the widest discrepancies in the income gap and they fall squarely within the 1% themselves.  Full story here

• The most common measure of inequality is the share of income earned by the top 1% -- the highest-earning 1.5 million individuals and couples. This was about 18% of all income in 2011, twice as much as when Ronald Reagan was reelected president in 1984. Because one-percenters get a large portion of their income from investments, their share of all income fell to 17% after the stock market plunged in 2008.
• The gap between most one-percenters and most of the 99% isn't that wide because the most extreme inequality is at the very top of the income scale. The chasm between the super-rich -- the highest-earning 15,000 tax filers -- and others in the top 1% is so large that it skews the overall result. Factor it out, and even inequality between the poor and the well-off is far less than 10-to-1. Though that's still too much inequality in the view of some people, it's not the extreme inequality that often makes the headlines.
• According to one study, when government subsidies and employer-funded health insurance are included, the ratio of well-off taxpayers at the 90th percentile of income and the poor at the 10th percentile is also about 6-to-1. And this measure of inequality isn't getting wider. That 6-to-1 ratio is unchanged since 1990s, and the ratio was roughly 5-to-1 in the 1980s.
• By contrast, inequality within the top 1% soared over that same period. In 1984, the super-rich 0.01% earned $1 out of every $9 pulled in by all of the richest 1%. By 2010, the super-rich were hauling in $1 of every $5 earned by one-percenters.
• Meanwhile, inequality among the vast majority of people isn't so wide, and it isn't getting wider. Even after a brutal recession that lowered living standards for most people, the average American isn't losing ground compared with most others, even if the gulf between average and very wealthy is growing broader. Cornell University economist Robert Frank, an expert on public attitudes about wealth, argues that perceptions about living standards are based as much on one's relative position compared with neighbors and coworkers than on actual dollars and cents.