The 1 percent's very good year
It turns out that 2014 was an excellent year for America's wealthiest families. For the rest of the country, not so much.
The top 1 percent of U.S. households saw their earnings grow 4.9 percent in 2014, according to a new analysis of Social Security Administration data from the Economic Policy Institute, a left-leaning think tank. That represents a healthy boost to those families' bottom line, especially given that inflation grew at less than 1 percent last year.
Life was even better for the super-rich, or the 0.1 percent of America's earners, whose income jumped 8.9 percent last year. That income growth appears even more favorable when compared with the middling fortunes of the bottom 90 percent, given that their incomes rose just 1.4 percent in 2014, keeping them barely ahead of inflation.
Still, the fatter wallets for America's richest families comes after a relatively lean year in 2013, when their earnings fell 0.2 percent. But that year appears to be an anomaly, given an extra Medicare tax on the rich and a new higher tax bracket in 2013, which may have incentivized some to shift earnings into 2012. Because the wealthiest Americans often rely on capital gains from sales of stock and other assets to bolster their income, that gives many the flexibility to shift income into earlier or later tax years.
"The strong growth of earnings at the top in 2014 suggests that the highest earners have found their mojo once again," wrote EPI president Lawrence Mishel and research assistant Will Kimball.
They added, "The top 1.0 percent's earnings have nearly returned to their previous high point, attained in 2007. In fact, the earnings of workers between the 99th and 99.9th percentiles have reached their highest level of all time."
America's growing income inequality -- characterized by two decades of eroding purchasing power for middle-class Americans and a surge in wealth for the richest families -- has become a lightning rod in the popular discourse and on the campaign trail. Democratic presidential candidate Bernie Sanders, for one, has made addressing the growing wealth disparity in America one of his top issues.
While the high growth in income for America's richest families may seem like a continuation of the country's winner-takes-all climate, there's one data point that illustrates how the very wealthiest families might still playing catchup. The top 0.1 percent -- with annual income of $2.54 million last year -- still haven't returned to their pre-recession peak of $2.77 million in annual income, the EPI found.
All other income groups have now returned to their pre-recession incomes. But that won't provide much comfort for the middle class: the bottom 90 percent made $33,297 in annual income last year, just $20 more than they took home in 2007.
There's a word for that, in EPI's view: Stagnation.