CHART: Remember When Poor People Saw Their Incomes Grow Faster Than Rich People?

[SheilaT]

17. The income growth at the top was held in check

after 1913 by income taxes. The top marginal rates were very high from (I think, I'm not looking this up) sometime in the 1930's through to about 1970. Meanwhile, the income grown at the lower end was fueled by minimum wage, which first took effect around 1935, then the well-paying jobs of WWII, which you can see in a clear rise of the bottom 90% at 1940. Also, and at least as important, was the growth and strength of union jobs, and that rate levels off/declines with the decline of unions.

There is more than one thing going on here. Very different things affect income growth at the top than what affect income growth at the bottom, even though in some ways those two things are linked. In a perfectly equitable society, the growth lines would match almost perfectly, with each percentile achieving the same amount of growth, even though because they'd start with different amounts at the beginning, they'd still have different amounts at the end, and the difference between the amounts would also grow.

Think of it this way: at the beginning, person A makes $1,000/yr, person B $5,000, person C $10,000, and person D $100,000.
Everyone's income doubles. Now the amounts are $2,000, $10,000, $20,000, and $200,000. Person A is still getting 1% of what person D is getting, but the reality of what person D can now buy is even greater.

So maybe we really do need a Maximum Wage.