Who is the 1%?
Glad to see the Economist focus on the actual makeup of the 1% in America by wealth and income and find that it's the financial sector. While CEOs are often targetted in the press, the game has moved on:
Steve Kaplan of the University of Chicago thinks finance explains much of the rise in inequality. Updating a series developed by Thomas Piketty and Emmanuel Saez, Mr Kaplan notes that the share of income going to the 1% reached an 80-year high of 23.5% in 2007, only to sink to 17.6% in 2009 as the financial markets deflated (see chart). The trend is even more pronounced for the top 0.1%, whose share of total income rose to 12.3% in 2007 but sank to a still disproportionate 8.1% in 2009.
Mr Kaplan and Joshua Rauh of Northwestern University note that investment bankers, corporate lawyers, hedge-fund and private-equity managers have displaced corporate executives at the top of the income ladder. In 2009 the richest 25 hedge-fund investors earned more than $25 billion, roughly six times as much as all the chief executives of companies in the S&P 500 stock index combined.Within the 1% then are three groups -- well paid professionals (doctors, lawyers), business people, and finance folks (including a subset of Wall Street oriented lawyers). The top end of the 1% is very skewed towards finance.