Another study, by the Congressional Budget Office, using tax data, calculates that the share of national after-tax income going to the top 1 percent of households more than doubled, from 7.5 percent in 1979 to 15.6 percent in 2005. In 2005 alone, the $180,000 average income gain for these rich households was more than three times the average middle-income household's total income.
An academic look at increasing income polarization, written by economists Emmanuel Saez of the University of California, Berkeley, and Thomas Piketty of the Paris School of Economics, found that average incomes of the highest-earning 1 percent grew 11 percent year-over-year between 2002 and 2006. The bottom 99 percent saw their incomes grow on average just 0.9 percent annually.
Then The New York Times this month reported that average compensation for chief executives who served at least two years at some 200 major US companies grew by 5 percent in 2007, to $11.2 million. With their businesses often slumping, performance-based bonuses were down. But discretionary bonuses, not linked to performance, were up a bit. For CEOs, "things go well when things go up; they go well when things go down," says Mr. Bernstein. "It's a heck of a racket."
A couple of decades or so ago, CEO compensation had minor material impact on the bottom line of corporations. Now their pay has reached such a level that more and more shareholders object. Congressional committees hold hearings on the issue. But at a time when political candidates need campaign contributions, no restraining action has been taken.
Meanwhile, the presidential candidates are speaking of the urgency of dealing with the housing crisis and the economic slowdown. But it seems likely that the Democratic candidates will talk more than the Republican one about growing income inequality.