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- A new report from the left-leaning Economic Policy Institute looks at how much workers made in 2021.
- The bottom 90% of workers actually saw their wages decline in 2021, as the top 1% saw average wages grow.
- The gap between the top 1% of workers and bottom 90% has been accelerating over the last four decades.
The rich are getting even richer.
In 2021, even as wages seemed to grow for the lowest-earning workers, they were no match for how much the top 1% was making.
A new report from the left-leaning Economic Policy Institute looks at wage growth in 2021, using annual earnings from the Social Security Administration. They found that the top 1% saw average real wages grow 9.4% from 2020 to 2021, while the bottom 90% saw wages decline ever so slightly by 0.2%.
“What we’ve seen over the last 40 plus years is really an acceleration of these kinds of inequalities across the wage distribution,” Elise Gould, a senior economist at EPI and a co-author of the report, told Insider.
While the typical worker was doing a “bit better” in the tighter labor market with lower unemployment, “when you benchmark that against just how well, how tremendously well people at the very top are doing, it is dwarfed in comparison,” Gould said.
According to the report, the top 1% of earners made 14.6% of all wages in the year, compared to 58.6% of all wages going to the bottom 90% — the lowest ever share they’ve received on record.
“Even though some low-wage workers have done somewhat better, these data from the Social Security Administration show that the bottom 90% as a whole have actually suffered in the pandemic — magnifying, not lessening, the sort of pain that they felt in the 40 years prior,” Gould said.
While lower-paid workers and the middle class seem to have successfully clawed back some wage gains as labor shortages and unions pop up across the workforce, they’re still not close to touching the gains of the wealthiest over the past few decades. After adjusting for inflation, wages have climbed more for the richest Americans and more quickly.
“Wages for the top 1% grew more than seven times fast as wages for the bottom 90% between 1979 and 2021,” the EPI authors wrote. “The top 1% now amasses a record share of total earnings, while the bottom 90% share of earnings has hit a historic low.”
The following chart shows just how much wage growth has soared for the top 1% from 1979 — and how little it changed for the bottom 90% relative to the rich and very rich.
The top 1% saw their inflation-adjusted average wages measured in 2021 dollars increase from $267,464 in 1979 to $819,324 in 2021, or an increase of 206.3%. Wages for the 95th to 99th percentile saw an increase of 94.0% from 1979, with average wages standing at $215,032 in 2021.
The bottom 90% saw a much smaller increase of 28.7% based on averages in 2021 dollars — from $28,415 in 1979 to $36,571 in 2021. That change is slightly down from the 29.0% growth seen in both 2019 and 2020 for this cohort as those wages declined between 2020 and 2021.
The report is the latest dataset to illustrate just how inequality has widened and accelerated over the last few decades, as it became increasingly harder for the normal families to substantively grow their incomes while the top 1% has more money than the entire middle class. The gap between CEO and worker pay is at its highest since 1965, with the 350 top executives making 399 times more than their workers.
That widening chasm is due to a slew of policies like keeping the federal minimum wage low, allowing discrimination in the workplace, tax cuts at the very top, and weakening worker bargaining power, according to EPI. Gould said that things like strengthening labor laws to allow the myriad of workers interested in organizing to join a union could help; so could the Federal Reserve prioritizing full employment. Other policies like raising the minimum wage, enforcing action against wage theft, and paring down non-competes might also help chip away at the growing gap.
But right now, the top 1% is making a disproportionate share of total earnings — an amount that’s only been growing.
“How did they get such a big share of the pie?” Gould said. “Well, that came out of most people, right? So that’s coming out of people primarily at the bottom of the wage distribution.”
