UPDATE: Johnston reports that the Social Security Administration now says its data were wrong and it has updated the numbers, which now show that the $50 million-a-Year Club did not boom in 2009 after all.
Its numbers fell and its members’ average income declined, rather than soared.
David Cay Johnston points out over at Tax.com that earnings for those making over $50 million a year exploded last year (in what was supposed to be a bad year for the rich), and takes the press to task for missing the story.
He’s right. It’s a good one.
Johnston takes a look at Social Security Administration data to find that:
The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.
The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!
The total income brought home by the over-$50 million club more than tripled from 2008 despite having fewer members. Those seventy-four people brought home more money than the bottom 19 million American workers combined, Johnston reports. And that doesn’t include income from interest, dividends, and capital gains, which is surely awe-inspiring for those seventy-four top earners.
Meanwhile, there were fewer Americans able to find work than there were in 2005, median wages dropped to $26,261, lower than a decade ago. As Johnston notes, half of American workers earn about $500 a week or less—and that’s pre-tax.
His conclusion:
What does this all mean? It is the latest, and in this case quite dramatic, evidence that our economic policies in Washington are undermining the nation as a whole.We have created a tax system that changes continually as politicians manipulate it to extract campaign donations. We have enabled ‘‘free trade’’ that is nothing of the sort, but rather tax-subsidized mechanisms that encourage American manufacturers to close their domestic factories, fire workers, and then use cheap labor in China for products they send right back to the United States. This has created enormous downward pressure on wages, and not just for factory workers.
Hear, hear!
Now it would be nice to see the mainstream press pick up this story. While we wait for that, you should go read the excellent series on inequality and its causes that Timothy Noah wrote at Slate last month.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.