Who Are the 1% and What Do They Do for a Living?

Who Are the 1% and What Do They Do for a Living?

 

by Mike Konczal

Friday, 10/14/2011 - 1:38 pm

http://www.newdeal20.org/2011/10/14/who-are-the-1-and-what-do-they-do-for-a-living-61759/

 

     There's good reason to focus on the top 1%:

     they're distorting our economy.

 

Look, a crazy anti-capitalist anarchist carrying a

bizarre sign incompatible with the basic tenents of

liberals: [photo of demonstrator carrying a placard with

a graph labeled 'Average Household Income Before Taxes'

-- moderator]

 

Or not.

 

A lot of emphasis is on the "99%" versus the "1%" in

these protests. But who are the 1% and what do they do

for a living? Are they all Wilt Chamberlains and Oprahs

and other people taking part in the dynamism of the new

economy? Nope. It's same as it ever was -- high-level

management and the financial sector.

 

Suzy Khimm goes through the numbers here. I'm curious

about occupations. I'll hand the mic off to "Jobs and

Income Growth of Top Earners and the Causes of Changing

Income Inequality: Evidence from U.S. Tax Return Data"

by Bakija, Cole, and Heim. This is the latest and

greatest report on occupations and inequality. Here's a

chart of the occupations of the top 1%:

 

Inequality has fractals. Let's go into the top 0.1% -

what do they look like?  Here's the chart of the

occupations of the top 0.1%, including capital gains:

 

It boils down to managers, executives, and people who

work in finance. From the paper: "[o]ur findings suggest

that the incomes of executives, managers, supervisors,

and financial professionals can account for 60 percent

of the increase in the share of national income going to

the top percentile of the income distribution between

1979 and 2005."

 

For fun, there are more than twice as many people listed

as "Not working or deceased" than are in "arts, media,

sports." For every elite sports player who earned a

place at the top of the income pyramid due to technology

changes and superstar, tournament-style labor markets

that broadcast him across the globe, there are two trust

fund babies.

 

The top 1% of managers and executives often means C-

level employees, especially CEOs. And their earnings

versus the average worker have skyrocketed in the past

30 years, so this shouldn't be surprising:

 

How has this evolved over time?  Can we get a cross-

section of that protest sign above?

 

Same candidates. There's a reason the protests ended up

on Wall Street: The top 1% and top 0.1% comprises all

the senior bosses and the financial sector.

 

One of the best things about Occupy Wall Street is that

there is no chatter about Obama or Perry or whatever is

the electoral political issue of the day. There are a

lot of people rethinking things, discussing, learning,

and conceptualizing the kinds of world they want to

create. Since so much about inequality is a function of

the legal structure known as a "corporation," I'd

encourage you to check out Alex Gourevitch on how the

corporate is structured in our laws.

 

The paper notes that stock market returns drive much of

the manager's income. This is related to a process of

financialization, something JW Mason has done a

fantastic job outlining here. The "dominant ethos among

managers today is that a business exists only to enrich

its shareholders, including, of course, senior managers

themselves," and this is done by paying out more in

dividends that is earned in profits. Think of it as our-

real-economy-as-ATM-machine, cashing out wealth during

the good times and then leaving workers and the rest of

the real economy to deal with the aftermath.

 

Both articles mention chapter 6 of Doug Henwood's Wall

Street; anyone interested in how things have changed and

where they need to go would be wise to check it out.

It's even available for free pdf book download here.

 

There's good reason to focus on the top 1% instead of

the top 10 or 50%. There is evidence that financial pay

at this elite level is correlated with deregulation and

the other legal changes that brought on the crisis.

High-ranking senior corporate executives' pay has

dwarfed workers' salaries, but is only a reward for

engaging in shady financial engineering practices. These

problems require a legal solution and thus they require

a democratic challenge and a rethinking of how we want

to structure our economy. Here's to the 99% and Occupy

Wall Street helping get us there.

 

Mike Konczal is a Fellow at the Roosevelt Institute.

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