Category: Research Repository

Raw research, working drafts, and data compilations. Unfinished materials and background research that may be useful for writers, researchers, and engaged citizens.

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Wealth transfer: income inequality

Key Points

  • Research suggests that since the 1980s, regular workers’ incomes have largely stagnated, while higher-level salaries, especially for executives, have grown dramatically, with CEO pay increasing over 1,000% compared to modest gains for typical workers.

  • It seems likely that regular workers have seen a decline in traditional benefits like pensions, shifting to less secure options, while higher-level employees likely enjoy more comprehensive benefits, including supplemental retirement plans and perks.

 

Income Comparison

Since the 1980s, regular workers’ wages have barely budged when adjusted for inflation. For example, by 2018, median household income was no higher than in 2000, indicating a 15-year stagnation period. In contrast, executive compensation, particularly for CEOs, has soared, with pay increasing by 1,209.2% from 1978 to 2022, while typical workers’ pay rose only 15.3% over the same period. By 2020, CEOs earned 351 times more than typical workers, up from 61-to-1 in 1989.

 

Benefits Comparison

For regular workers, benefits like defined benefit pensions have declined, with only 5% of organizations offering them to new hires by 2020, down from 48% in 2000. Health insurance coverage also dropped, from 62% in 1980 to 51% in 2013. Higher-level employees, however, likely have access to better benefits, such as supplemental executive retirement plans (SERPs) and enhanced health insurance, with 44% of management workers having access to Health Savings Accounts in 2018 compared to 11% of service workers.

 

 

Survey Note: Detailed Analysis of Income and Benefits Trends Since the 1980s

 

This note provides a comprehensive analysis of the trends in income and benefits for regular workers compared to higher-level employees, particularly executives, since the 1980s. The data is drawn from various economic reports, including those from the Economic Policy Institute (EPI), Bureau of Labor Statistics (BLS), Pew Research Center, and other reputable sources, to ensure a thorough understanding of the divergence over time.

 

Income Trends: Regular Workers vs. Higher-Level Employees

 

Regular Workers’ Income:

 

Higher-Level Employees’ (Executives) Income:

 

Comparison Table: Income Growth Since 1978:

| Group | Growth Rate (1978–2023) | Notes |

|———————–|————————-|———————————————————————-|

| Regular Workers | 15.3%–24% | Stagnant real wages, adjusted for inflation, with most gains at the top. |

| CEOs/Executives | 940%–1,209.2% | Driven by stock options, bonuses, and market trends, far outpacing workers. |

 

Benefits Trends: Regular Workers vs. Higher-Level Employees

 

Regular Workers’ Benefits:

 

Higher-Level Employees’ (Executives) Benefits:

  • Higher-level employees, including executives, generally have access to more comprehensive and flexible benefits compared to regular workers. While specific historical data is limited, it is implied that executives have benefited from trends like personalization and innovation in benefits. For example, in 2018, 44% of management, professional, and related workers had access to Health Savings Accounts (HSAs), compared to only 11% of service workers, suggesting better access for higher-level employees [BLS, 2019, https://www.bls.gov/opub/btn/volume-8/compensation-trends-into-the-21st-century.htm].

  • Executives often have access to supplemental executive retirement plans (SERPs), which are defined benefit plans tailored for high-level employees and not subject to the same regulatory constraints as traditional pensions. This allows for higher benefits, as noted in various compensation reports [Workplace Consultants, https://workplaceconsultants.net/commentary/retirementtsunami/the-history-of-benefits/].

  • Access to retirement plans is also higher for executives. In 2018, 80% of management, professional, and related workers had access to defined contribution plans, with 67% participation, compared to 41% access and 22% participation for service workers. For defined benefit plans, 24% of higher-level workers had access, compared to 10% for service workers [BLS, 2019, https://www.bls.gov/opub/btn/volume-8/compensation-trends-into-the-21st-century.htm].

  • Executives may also receive additional perks such as company cars, club memberships, relocation assistance, and post-retirement benefits, which are less common for regular workers. Health insurance plans for executives are likely more robust, with lower out-of-pocket costs and higher coverage rates, though specific historical data is sparse.

 

Comparison Table: Benefits Access in 2018 (Example for Recent Trends):

| Benefit Type | Regular Workers (Service, %) | Higher-Level Workers (Management, %) |

|—————————-|——————————|————————————–|

| HSA Access | 11 | 44 |

| Defined Contribution Access| 41 | 80 |

| Defined Benefit Access | 10 | 24 |

 

Factors Contributing to the Divergence

 

 

Conclusion

 

Since the 1980s, there has been a stark contrast between the income and benefits of regular workers and higher-level employees:

  • Income: Regular workers have experienced wage stagnation, with real wages barely increasing since 1978, while executive compensation has grown by over 1,000%, far outpacing productivity and stock market gains.

  • Benefits: Regular workers have seen a decline in traditional benefits like defined benefit pensions and employer-sponsored health insurance, with a shift toward less secure defined contribution plans. Higher-level employees, however, continue to enjoy more comprehensive benefits, including access to SERPs, better health insurance, and additional perks.

 

This divergence reflects broader economic and policy trends that have favored higher-level employees while leaving regular workers with limited income growth and reduced benefits, highlighting the growing income inequality in the U.S. economy.

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Wealth transfer 1%

Key Points

  • Research suggests that the RAND Corporation’s 2025 study estimates $79 trillion in income has been redistributed from the bottom 90% to the top 1% since 1975, based on a comparison to a counterfactual scenario of more equitable growth.
  • The evidence leans toward this figure being credible, as it is supported by the study’s author, Carter C. Price, and cited by reputable sources like NationofChange and Senator Bernie Sanders.
  • There is no significant controversy found regarding this specific estimate, though the study is a working paper and may not have undergone full peer review.

Overview

The RAND Corporation’s 2025 study, titled “Measuring the Income Gap from 1975 to 2023: Extending Previous Work” (WR-A516-2), provides an estimate of income redistribution in the United States, suggesting a significant shift of wealth over the decades. This response outlines the key findings and contextual details for a lay audience, followed by a detailed survey note for those seeking deeper insights.

Study Findings

The study estimates that $79 trillion in income has been redistributed from the bottom 90% of workers to the top 1% since 1975. This figure reflects the cumulative impact of rising income inequality, calculated by comparing actual income growth to what it would have been if growth had been shared more evenly, similar to the post-World War II period up to 1974. In 2023 alone, the bottom 90% would have earned an additional $3.9 trillion under this counterfactual scenario.

Context and Credibility

This estimate extends earlier work by RAND, building on a 2020 study that estimated $50 trillion in redistribution up to 2018. The increase to $79 trillion is attributed to factors like inflation, continued inequality growth, and the extended time frame to 2023. The study, authored by Carter C. Price, is a working paper from the RAND Corporation, a nonpartisan research organization, and has been cited by sources like NationofChange and Senator Bernie Sanders, adding to its credibility. However, as a working paper, it may not have undergone full peer review, which is worth noting for academic rigor.

Supporting Sources

Survey Note: Detailed Analysis of Income Redistribution Estimate

This section provides a comprehensive examination of the RAND Corporation’s 2025 study on income redistribution, offering a detailed breakdown of the findings, methodology, and contextual factors. It aims to mirror the style of a professional research article, ensuring all relevant details from the investigation are included for a thorough understanding.

Background and Study Overview

The RAND Corporation, a nonpartisan research institution focused on policy analysis, released a working paper titled “Measuring the Income Gap from 1975 to 2023: Extending Previous Work” (WR-A516-2) on February 16, 2025, authored by Carter C. Price. This study builds on prior research, notably the 2020 study “Trends in Income From 1975 to 2018,” which estimated a $50 trillion redistribution from the bottom 90% to the top 1% up to 2018. The 2025 study extends this analysis to 2023, estimating a cumulative redistribution of $79 trillion since 1975, reflecting the ongoing impact of rising income inequality.

The study’s findings have been highlighted in various media outlets and political discussions, including coverage by NationofChange and a press release from Senator Bernie Sanders, underscoring its relevance to contemporary economic policy debates. Given the current date, July 9, 2025, the study is recent and aligns with ongoing discussions on economic disparity.

Key Findings and Methodology

The central estimate is that $79 trillion in income has been redistributed from the bottom 90% of workers to the top 1% since 1975. This figure is derived from a counterfactual scenario where income growth from 1975 to 2023 mirrored the more equitable distribution observed from 1945 to 1974, a period characterized by broader sharing of economic gains. Specifically, the study finds that in 2023 alone, the bottom 90% would have earned an additional $3.9 trillion if growth had been distributed evenly, contributing to the cumulative $79 trillion over the period.

The methodology involves comparing actual income growth to this counterfactual, accounting for factors such as inflation and the extended time frame. The increase from the 2020 study’s $50 trillion estimate is attributed to these factors, as well as continued growth in inequality. The study was sponsored by Civic Ventures and conducted within RAND’s Education and Labor division, emphasizing its focus on economic and labor policy implications.

Supporting Evidence and Citations

The study’s findings are corroborated by several sources:

These citations demonstrate the study’s impact and acceptance in public discourse, though it is noted that the study is a working paper, intended for informal peer review and not necessarily formally edited, as per RAND’s description.

Comparison with Previous Estimates

To contextualize the $79 trillion figure, it is useful to compare it with the 2020 study:

  • The 2020 study, “Trends in Income From 1975 to 2018,” estimated a $50 trillion redistribution, with an annual impact of $2.5 trillion in 2018 alone, as reported by sources like Time and Business Insider.
  • The increase to $79 trillion in the 2025 study is explained by inflation, continued growth in inequality, and the extended period to 2023, as noted in the study’s content. This comparison highlights the accelerating nature of income inequality over time.

Potential Criticisms and Limitations

While no direct criticisms of the 2025 study were found, the investigation considered potential issues by examining critiques of the 2020 study, given its methodological similarity. The 2020 study, also a working paper, was not found to have significant public criticisms in the search, suggesting that RAND’s approach is generally accepted. However, as a working paper, the 2025 study may not have undergone full peer review, which could be a limitation for academic rigor. Additionally, the counterfactual scenario relies on historical data from 1945–1974, which may not account for structural changes in the economy, such as globalization or technological advancements, potentially affecting the estimate’s accuracy.

Implications and Broader Context

The $79 trillion estimate underscores the significant economic shift toward greater inequality, with implications for policy debates on taxation, labor rights, and social welfare. Senator Sanders, for instance, linked the findings to calls for reversing tax policies favoring the wealthy, highlighting the political resonance of the study. The RAND Corporation’s focus on real-world policy issues, as seen in their broader research portfolio, reinforces the study’s relevance to current economic challenges.

Summary Table: Key Estimates and Comparisons

Study Year Period Covered Redistribution Estimate Annual Impact (Latest Year) Key Factors for Increase
2020 1975–2018 $50 trillion $2.5 trillion (2018) N/A
2025 1975–2023 $79 trillion $3.9 trillion (2023) Inflation, inequality growth, extended time frame

This table summarizes the evolution of estimates, providing a clear comparison for readers.

In conclusion, the RAND Corporation’s 2025 study provides a robust estimate of $79 trillion in income redistribution since 1975, supported by credible sources and aligned with ongoing discussions on economic inequality. While limitations exist due to its working paper status, the findings offer valuable insights for understanding and addressing income disparities in the United States.