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Comment by twoodfin | Hacker News Reader

The economists Emmanuel Saez and Thomas Piketty found that 93 percent of the income gains from the 2009-10 recovery went to the top 1 percent of taxpayers. The top 0.01 percent captured 37 percent of these additional earnings, gaining an average of $4.2 million per household.

Shocking that income gains during a stock market rally (typically a leading economic indicator) go to the investor class while employment income (a lagging indicator) continues to struggle.

This is agitprop. Isn't there anyone other than Saez folks like the author can cite? Saez could have put out a "study" to show that the rich took a real bloodbath during '07-'08 while the middle class barely felt a prick for just the same reason. But he didn't: he'd rather be a hack and win unending favorable references in Times thumb suckers.

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Saez's contribution to economics was a novel way to measure income inequality of really small percentages (top 1%, 0.1% etc.) of the population. That's why it's hard to find other studies. He wasn't "being a hack" he was doing research in a topic that he found interesting. His work by the way, won him the prestigious John Bates Clark medal so we can infer that his work is respected in economic circles.

By the way, if you took the data from the census and measured wealth instead of income, you would get a far more extreme differences in inequality. This makes sense of course, since wealthier people have more money in the stock market.

You are correct that the rich lost a lot during the stock market crash in 2008, but it similarly recovers quickly as the market rallied. Again, this is a natural effect of wealthier people having more money in the stock market.

Saez's contribution to economics was a novel way to measure income inequality of really small percentages (top 1%, 0.1% etc.) of the population.

That may be, but income statistics like the one cited here don't require anything novel: The IRS publishes everything you'd need to know.

No it doesn't, that's the point. The IRS publishes the top 1% and I believe the top 0.1%, but it does not cover the top 0.01% which you cited.

http://www.irs.gov/pub/irs-soi/08in12ms.xls

Try dividing the number of $10M+ earners by the total number of taxable returns. You'll get a number surprisingly close to .01%.

Yes, what Piketty and Saez did was a more sophisticated operation on IRS data to get a time series so that we can measure exactly how the top 0.01% etc. did.

Here's the link to the paper if you want the details. http://elsa.berkeley.edu/~saez/

Barely felt a prick? Really? That's 9+% unemployment to you? Or the millions of foreclosures?

I mean that as scary as things seemed in December of '08, most Americans' incomes hadn't actually declined that much. They would later, but that's the point. The wealthy had already seen a huge income hit. Based purely on choosing your window to match a market rally or a crash, you can create the kind of disparate income impact statistics that Saez trumpets.

You're the one choosing a window to make a point. 2008 was the worst year for the wealthy, but also the only bad bad year. 2007 they saw record gains and those were mostly recovered by 2010. Jobs and housing has yet to recover.

Yes, its like 3 days before his accident, the man was perfectly happy. Although, in this case, replace accident with losing his job/livlihood. And the handwriting was on the wall, for the executives, as of 9/08 and what happened to Lehman. And from there the shit flows downstream...

>while the middle class barely felt a prick

A lot of middle class people's portfolios lost a huge amount of their value and the overall tumult let to a lot of job loss. The economy still hasn't recovered to where it was then.

Remember Saez is talking about income. IRAs and 401(k)'s aren't reported as income until you take disbursements. So the phenomenon I'm discussing only affects those who truly make their annual income from investment.

If Saez used wealth rather than income, I suspect this stat would end up much less impressive for just the reason you mentioned. He's essentially just capturing the effects of the market rally.

Most Americans' wealth is in the value of their homes, which took a beating during that same time:

http://www.washingtonpost.com/business/economy/fed-americans...

"The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992."

* the rich took a real bloodbath during '07-'08 while the middle class barely felt a prick for just the same reason.*

Explain? Curious to know; if you have a blog link or article to check out I'd appreciate it.

Between 2007 and 2008, the median household income nominally increased, and inflation adjusted dropped $1900 out of $54,000.[1]

From December 1, 2007 to December 1, 2008, the value of the S&P 500 was cut in half. Somehow I suspect if you compared tax returns from 2007 and 2008, you'd see that high income taxpayers lost huge.[2] That's how it looks to me when I eyeball it. Look at taxpayers with more than $10,000,000 in income vs $50,000-$75,000, for example. The former dropped $160 billion in AGI, while the obviously much larger latter group dropped only $15 billion. That's the mirror image of the kind of data that allows Saez to claim that 90% of income gains in 2009-10 went to the top 1%.

[1] http://www.davemanuel.com/median-household-income.php

[2] http://www.irs.gov/pub/irs-soi/07in12ms.xls http://www.irs.gov/pub/irs-soi/08in12ms.xls

"agitprop" ~ https://en.wikipedia.org/wiki/Agitprop

Agitprop, I've never heard that word before. Are you Russian or Eastern European?

I think you misunderstand the implication. Using 'agitprop' here implies that the views of Emmanuel Saez and Thomas Piketty are ideologically similar to the highly politicized arguments of leftists in support of Communism. I think it's a fancy equivalent for calling the authors 'pinkos.'

"... I think you misunderstand the implication. ..."

Yes I have. Pinkos, why not say that then?

> The top 0.01 percent captured 37 percent of these additional earnings, gaining an average of $4.2 million per household.

I just want to thank the author for separating the 1% form the 0.01% The 1% is the upper middle class, the actual "American Dream" fulfillers, and they are getting a lot of heat that was deftly deflected away from the 0.1% and upper echelons of aristocracy, because most reporters are too lazy to think about logarithms.

The 1% is the upper middle class

Errr... how much income do you think makes you 1%? Hint: it's $150k/yr. That's not "upper middle class". I understand that there are a lot of people here that might make that, close to it, or more because software is very lucrative, but don't let that skew your perception of the world.

Where's your $150k coming from? The figure I usually hear cited is $350k, though that's for "household income". Adding to your main point though, it's also worth pointing out that $150k in, say, downtown New York is pretty different from $150k in, say, Cheyenne, Wyoming. But I'd still call both "upper-middle class." Maybe it's near the lower-fuzzy-boundary of "upper middle class", but I don't see how you think it's a classic "middle class" salary. It's certainly not an "upper class" salary.

These numbers all come from the IRS. $150k around the top 1% for single/separate filers. $350k is married filers.

According to the IRS the top 1% overall is $318k, according to the CBO it's $282k.

http://www.irs.gov/uac/SOI-Tax-Stats---Individual-Statistica...

http://www.cbo.gov/publication/43373

$190K is the number for that I've always heard thrown around for individuals, which, if both parties in the household are earning that much, easily adds up to $350K and more.

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