Think you’re keeping up? 99 to one, you’re not; you’re losing ground in the economy. The respected Congressional Budget Office just released a paper on income shares, showing changes from 1979 to 2007. Here’s the nut: Let me spell it out to you: If you are not rich, your share of national income shrank in […]

Think you’re keeping up? 99 to one, you’re not; you’re losing ground in the economy.

The respected Congressional Budget Office just released a paper on income shares, showing changes from 1979 to 2007.

Here’s the nut:

Let me spell it out to you: If you are not rich, your share of national income shrank in the 28 years between 1979 and 2007. If you are rich (upper 20 percent), you held ground. If you are super-rich (top 1 percent), you did great.

These are big averages; individuals, of course, vary. But it’s a pretty clear story. The data isn’t available for how income has divided since the economic crisis, but there’s reason to believe that things have likely gotten worse in the last four years (“Economy is in Crisis, Yet Luxury Brands, Tiffany’s, LVHM Still Report Sales Growth”)

The fact that incomes are diverging may itself become an economic problem as new research argues that growth is undermined by high income disparity. On the other hand, the fact that you may have lost income share, does not necessarily mean that you are actually worse off than you were. Your income (and consumption) can be higher than in the past, but your piece of the overall pie is smaller. So, which is more important? Absolute increase in income, or relative income?

More on this – a lot more – soon.