Piketty-Saez update

Emmanuel Saez and Thomas Piketty have updated their famous mapping of income inequality trends for the US. Their earlier findings showed that in 2010, the first year of economic recovery after the 2009-10 recession, 93% of all pre-tax income gains went to the top 1 per cent, or households making more than $358000. Their updated findings to include 2011, is even more dramatic,

From 2009 to 2011, average real income per family grew modestly by 1.7% but the gains were very uneven. Top 1% incomes (those making more than $367000) grew by 11.2% while bottom 99% incomes shrunk by 0.4%. Hence, the top 1% captured 121% of the income gains in the first two years of the recovery.

How did the top one percent capture more than the entire pre-tax income gain? By simple accounting identity, their gains came at the cost of the rest. In other words, the rest simply transferred their own gains to the one percent!