This chart from David Leonhardt, “How the Upper Middle Class Is Really Doing,” New York Times, 2/24/19, shows the winners and losers since income inequality started its leap forward in the Age of Reagan. (The inflation-adjusted chart takes into account government payments and taxes paid as well as salaries and other income.)
The bottom 50% by income gained something–but only about 1/3 of what the per capita DGP gained; and really, with rising costs of housing, health care, and education, and the spread of technology that Americans depend on, that isn’t much of a gain. Incomes for the middle 40% rose only about 2/3 as fast as the per capita GDP. The commonly envied 90th-99th percentile gained the same as the GDP. It’s above that line that the 1% and .01% rack up the big gains.
A later Pew report,”The American middle class is stable in size, but losing ground financially to upper-income families,” shows that nothing really changed here between 2011 and 2016. Basically, the more Americans earn, the more they gain every year, not just in $ but also in %.
It is clear that income inequality is higher in the US than in most other developed countries. With antiquated tax laws that favor investors, real estate developers, hedge fund operators, and heirs of the wealthy over salaried Americans, it’s no wonder that Congress and 2020 presidential candidates are talking about how to reduce economic unfairness.
As shown in this chart from Pew Research Center, “The middle class in the U.S. is smaller than in Western Europe,” 4/20/17, the US has more people in the lower and upper income groups and fewer in the middle than those eleven Western European countries:.