Thomas Piketty's research shows rich are getting richer
French economist Thomas Piketty and his research partners have transformed the wealth gap debate by popularising the concept of a financially elite 1 per cent.
They framed the issue of income inequality in terms that ordinary people could grasp. Using tax records, they drilled into how much money it took to belong to the 1 per cent and what share of personal income this group controlled.
That idea became a rallying cry of the 2011 Occupy Wall Street movement. At the time, politics in the United States overshadowed the data that Piketty had unearthed. That is, until last month, with the publication of Piketty's new book Capital in the 21st Century.
Piketty has documented that an increasingly small fraction of the population receives a growing share of America's riches.
About 22.5 per cent of US personal income in 2012 went to the top 1 per cent, the most since 1928. That sounds like a lot. It is. But the concentration is far greater at the top 0.01 per cent. That tiny cluster controls nearly 5.5 per cent of all income - a larger share than at any point dating to 1913. That happens to be the year the 16th Amendment to the Constitution was ratified, allowing for Congress to collect income taxes.
Someone in the top 1 per cent has an average income of US$1.3 million. Among the top 0.01 per cent, it's US$30.8 million. Adjusted for inflation, the top 0.01 per cent's average earnings have jumped by a factor of seven since 1913.
For the bottom 90 per cent of Americans, by contrast, average incomes after inflation have grown by a factor of just three since 1917 and have actually fallen for the past 13 years.
Piketty's figures are available for free online at The World Top Income Database. It lets users see the wealth gap in several countries, including China.
Visit the database at: http://topincomes.g-mond.parisschoolofeconomics.eu/