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Top 1 percent more on top than ever

David Gura Oct 26, 2011

Top 1 percent more on top than ever

David Gura Oct 26, 2011

Kai Ryssdal: Here’s some fodder for the zeitgeist debate over whether or not Occupy Wall Street might be onto something. There’s a new report out from the non-partisan Congressional Budget Office on income inequality. Contained within is a somewhat startling statistic: The top 1 percent of the population has seen its share of total national income nearly double in the last 30 years. The CBO says the top 1 percent now captures more than 20 percent of everything we collectively take home.

The protesters down on Wall Street and across the country and the world have a saying you might have heard: ‘We are the 99 percent,’ it goes. So who’s in the 1 percent? And what do they do for a living that gets them there? We sent Marketplace’s David Gura to find out.

David Gura: So, there’s this old story about F. Scott Fitzgerald and Ernest Hemingway, and it may be apocryphal, but supposedly Fitzgerald said to Hemingway, “The very rich are different from you and me.”

Jacob Hacker: And Ernest Hemingway replied, “Yes. They have a lot more money.”

That’s Jacob Hacker. He teaches at Yale — political science, not American literature. Anyway, Hacker says that over the last 30 years, the wealthiest Americans have gotten way wealthier.

Hacker: The top 1 percent has pulled dramatically away from the rest of Americans over the last generation.

Hacker says government policies helped fuel that trend with tax cuts and loopholes that benefit the rich. We’re talking about corporate lawyers, hedge fund managers and real estate titans.

Lane Kenworthy is a sociologist at the University of Arizona.

Lane Kenworthy: A third of them, roughly speaking, are executives and supervisors who are not in finance.

Kenworthy says you’d expect the top 1 percent to include athletes and movie stars. Well, you’ll be surprised.

Kenworthy: Sports and media is actually much, much smaller than most people imagine.

Only about 2 percent of that top 1 percent.

So, what’s changed? Jacob Hacker says we’ve seen a big shift. Today’s rich, for the most part, are the working rich.

Hacker: Unlike the rich of the Gilded Age, back in the early 20th century, the very rich today are not living off their accumulated wealth.

Making money off investments and real estate. Today, they’re getting big paychecks. Those have ballooned since financial deregulation. But compensation is more than than that: it’s also stock options, insurance and big bonuses. And the Gilded Age has given way to golden parachutes executives can deploy even when companies don’t do so well.

In Washington, I’m David Gura for Marketplace.

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