Click on graph for more legible image.
The Congressional Budget Office made quite a splash recently when it published its recent report, “Trends in the Distribution of Household Income between 1979 and 2007.” Progressives swooned in droves at seeming confirmation of their conviction that the rich are getting richer while the poor are getting poorer. (Actually, the report concluded that the richer are getting richer while the poor are treading water, while the middle class has gained ground modestly. Even then, it exaggerates the wealth gap by closing its study period in 2007. The wealth gap has declined significantly since then.)
But I post today’s Information Graphic, the work of Veronique de Rugy at the Mercatus Center, to dispel the notion that social mobility is a thing of the past and that a plutocracy is emerging. The chart above shows that million-dollar incomes are highly variable. You can do spankingly well one year and horribly the next. For many people, incomes spike in a single year while they exercise a decade’s worth of stock options or sell a business they built over a lifetime. Literally half of the million-dollar income earners hit the million-dollar mark for one year before falling back into the ranks of the muddled masses. Only six percent of millionaires scored million-dollar incomes for more than nine years running.
What seems to be a widening income gap actually could reflect the increasingly variable nature of compensation for society’s top money makers. Hundreds of thousands of Americans make a disproportionate share of their boodle in a short period of time, an outcome of corporate America’s effort to tie compensation to performance (bonuses, stock options, and the like) instead of treating executives to fat salaries and perks through good times and bad. Last time I checked, that was a good thing, not a bad one.
— JAB
