The 99 percent are still in recession

President Obama's State of the Union speech will reportedly address the problems of the middle class, which has not fared well in this economy. Practically the only people who have fared well are the notorious one percent. To paraphrase the late New York City Mayor Ed Koch: How are they doin'?

Astoundingly well. Emmanuel Saez, the Berkeley economist who (with Thomas Piketty, an economist at the École d'economie de Paris) first mapped the enormous 34-year run-up in income share for America's top 1 percent, came up last year with a statistic that was widely quoted by people who care about rising income inequality. In 2010, the first year of economic recovery after the 2009-2010 recession, 93 percent of all pre-tax income gains went to the top 1 percent, which in that year meant any household making more than about $358,000. This was, I quipped at the time, a members-only recovery. No 99-percenters need apply. Saez has now updated this statistic to include 2011. When you look at the economic recovery's first two years, the top one percent (which by 2011 meant any household making more than about $367,000) captured 121 percent of all pre-tax income gains.

How is it even possible for the one percent to capture more than 100 percent of all income gains since the last recession? Looked at from one point of view, it's not. It is enough to say that in 2010 and 2011 all of the recovery went to the one percent. If you were in the bottom 99 percent, as by definition nearly all of us are, you didn’t see a dime of that recovery.

What did the bottom 99 percent see? Over 2010 and 2011, it saw, on average, a slight net decline in pre-tax income of 0.4 percent. This "negative growth" is what, at least theoretically, boosts the one percent's share of income gains from 100 percent to 121 percent. If you think of income distribution as a Pac-Man game, with the one percent as Pac-Man, imagine your Pac-Man consuming all the pac-dots in one game and then somehow, after you’ve left the arcade, gobbling up some of the pac-dots in the next player’s game too. Another way to put it is that the one percent didn’t just gobble up all of the recovery during 2010 and 2011; it put the 99 percent back into recession.

http://www.newrepublic.com/article/112397/one-percent-gobbles-economic-recovery