Inequality: Who Are the 1 Per Cent?
“We are the 99 per cent” is the slogan of the Occupy protest movement. It highlights the fact that 1 per cent of the US population controls 40 per cent of the wealth. So who are these super-rich?
The world now has more billionaires than ever - 1226 of them, according to Forbes magazine. But you don’t need billions to be in the top 1 per cent of earners. As of 2010, annual earnings before tax of around $350,000 sufficed in the US. £149,000 put you in that slim top tier in the UK.
The real concern for everyone from Occupy protesters to US president Barack Obama is not how rich these people are, but how much richer they are than everyone else. In recent decades, surging wages for top earners - and stagnation of pay for low earners - has widened the gulf between the haves and have-nots.
We’ve been here before. In the early 20th century, wealth was likewise concentrated in the hands of the few - mainly a class of “rentiers” whose income largely derived from inheritance and land ownership. Since that time, at least in the US, UK, Canada and Australia, the share of income accrued by the very richest people has followed a U-shaped trajectory (see graph), dropping after the Great Depression and the second world war and plateauing until the late 1970s, when the “Great Divergence” began.
What’s more, the composition of the top 1 per cent has completely changed. Now most of the wealthiest people aren’t rentiers, but entrepreneurs or highly paid employees. In the UK, two-thirds work in finance, while in the US a third are company execs, 14 per cent work in finance and 16 per cent in the medical profession. Together, members of the richest percentile take home a fifth of all income in the US, according to data from economist Emmanuel Saez of the University of California, Berkeley.