Where Has All the Income Gone? Look Up.

Here’s a picture that really is worth a thousand words. We came across this chart by the Economic Policy Institute on Washington Post journalist Ezra Klein’s blog. It shows that nearly two-thirds of the income growth since 1979 has gone to the top 10 percent of US taxpayers – a truly stunning statistic.

We were curious what the data show in California so we replicated this chart using Franchise Tax Board data, which are only available between 1993 and 2008. Here’s what we found.

Two-thirds of inflation-adjusted income gains went to the top 10 percent of California taxpayers between 1993 and 2008. That means that in 2008 just under 1.5 million Californians had among them a total income of $469 billion dollars – roughly equal to Switzerland’s economy, the 19th largest economy in the world. Even more stunning is the fact that nearly 40 percent of inflation-adjusted income gains during this period went to the top 1 percent of California taxpayers. That means that in 2008 fewer than 150,000 Californians had a total income of $208 billion dollars among them – roughly equal to Ireland’s economy, the 37th largest economy in the world.

How did low- and middle-income Californians fare during this period? Just 10 percent of inflation-adjusted income gains between 1993 and 2008 went to the 8.7 million Californians in the bottom three-fifths of the income distribution. And that modest gain was entirely driven by population growth, not income growth. The total number of Californians in the bottom three-fifths of the income distribution rose by 22.2 percent between 1993 and 2008. Their average inflation-adjusted income, however, fell by 2.3 percent. In other words, there were many more low- and middle-income Californians in 2008, each with a slightly lower income, on average, than in 1993.

— Alissa Anderson