The “Hood Robin” Economy

In 1973, if you put the 1 percent of the country that had made the most money in a room and got them to empty out their pockets, you’d see 8 percent of all the money paid out in wages over the last year falling to the floor. If you’d repeated that exercise in 2008, you’d find 18 percent of the economy’s income on the ground. You’d better have a pretty big room.

But that’s what makes the rich different from you and me: their riches. The problem is that since 1973 median wages have been stagnating. Inequality isn’t just rising because the rich are getting richer. It’s rising because the rest of us, by and large, aren’t. If median household incomes had risen between 1974 and 2008 by as much as they rose between 1949 and 1973, the median family would be making well over $100,000 a year by now. In such a world, we might wonder about inequality, but we’d have less reason to worry about it.

But the rest are not getting richer. The question is whether the two phenomena are connected: Has the economy gone Hood Robin, with median wages stagnating because the folks at the tippy-top are channeling more and more of the economy’s gains into their own bank accounts? Or have the rich and famous moved into their own economy, and whatever is going on with median incomes is a different problem that will require different solutions?

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