The Top 10% Took Half the Gains. The Bottom 90% Went Backwards.

The economy grew last month. Your paycheck didn’t.

The Bureau of Economic Analysis reported that real disposable personal income rose 0.3%, a number that sounds perfectly reasonable until the World Inequality Lab’s Real-Time Inequality project broke it open and showed you the chairs: the top 10% of earners captured 54% of all income growth in June. The bottom 90% — nine out of ten households — saw their real disposable income fall after inflation and taxes. The headline number said “up.” The distribution said “for them.”

This is the part where I’m supposed to say “we need stronger growth,” and that isn’t wrong — the economy slowed to 1.5% annual growth in the second quarter, and that matters. But it’s incomplete. Growth that doesn’t include nine out of ten households is a press release for the one household that doesn’t need it. The headline number is a decoy.

Now here’s what the Real-Time Inequality data does, every month: it takes the single aggregate figure that drives the headlines and splits it by income percentile, using the Distributional National Accounts framework built by economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. The BEA reports one number — total personal income, rising or falling. That number is accurate as far as it goes. It tells you nothing about who got the raise. It’s like reporting that a restaurant served 200 meals and not mentioning that one table ate 150 of them.

The tables show this for June. The top 10% took more than half the total increase. The remaining 90% went backward in real terms. The same pattern showed up in May, and the quarter before that, and the quarter before that. The groove runs one direction.

Now add the saving rate. The BEA reports a single household-sector average. Economists at the World Inequality Lab have pointed out that household saving is concentrated in the top deciles, which means movements in the aggregate rate are driven almost entirely by the highest-earning households. The number on your screen that says “the household saving rate is X” is, in practice, the saving rate of the people who were never going to run out anyway.

Then the wage data. The Atlanta Fed’s Wage Growth Tracker — a separate measure of median year-over-year wage growth for continuously employed workers — came in at 3.6% in June. The Consumer Price Index rose 3.5% over the same period. A margin of one-tenth of one percentage point. For the median worker who kept a job and got a raise, the real gain was a rounding error. For the bottom 90%, it was negative.

Inflation ran at 3.5% in June. If your income didn’t grow at least that much, you lost ground. The top 10% captured all the growth and then some; the bottom 90% got a pay cut. That’s not a bad month. That’s the design.

The Congressional Budget Office’s most recent Distribution of Household Income report showed that from 1979 to 2019, the share of post-tax-and-transfer income going to the top 1% rose by roughly 7 percentage points after adjusting for household size, while the share going to the bottom quintile fell. Four decades. One direction. Not an accident.

People already feel this. They don’t need the chart.

So what do you do when the aggregate is fine and the distribution is a wreck?

You change the distribution.

I know that sounds glib. Here’s why it isn’t.

The first thing you can do is change who owns the firm. Right now, when productivity rises and revenue goes up, the gains flow to capital — to shareholders, to buybacks, to the people at the top of the income ladder who hold the equity. A worker cooperative doesn’t solve every problem, but it answers the question this report raises: who gets the raise? Mondragon Corporation in the Basque Country has been doing this since 1956, with a pay ratio of roughly 5-to-1 between its highest and lowest paid workers. The average American CEO-to-worker pay ratio at large U.S. firms, according to the Economic Policy Institute, sits somewhere around 300-to-1. That gap isn’t a law of nature. It’s a governance choice. The most recent Democracy at Work Institute census counted about 820 worker cooperatives and democratic workplaces in America, up from 323 in 2014. The model is growing because people figured out that owning the place changes who gets paid.

The second thing you can do is change how wages are set. In the United States, wages are negotiated firm by firm — one company at a time, one worker at a time, against management that has most of the leverage. In Denmark, Germany, and most of northern Europe, wages for entire industries are negotiated collectively, across sectors. This is called sectoral bargaining, and its effect on distribution is direct: it compresses the spread. The top still earns more, but the floor is higher and the gap is smaller. A Center for American Progress study estimated that moving to sectoral bargaining in the United States could lift the share of workers covered by a union contract from about 11% to 29% — from 16.5 million to 42.4 million people. That’s not a utopia. That’s a policy change.

The third thing you can do is change what happens at the bottom. We know this works because we already tried it. In 2021, the expanded Child Tax Credit went out as a monthly, near-universal, dead-simple cash benefit. The Census Bureau’s Supplemental Poverty Measure showed child poverty fell 46% in a single year — from 9.7% in 2020 to 5.2% in 2021 — lifting roughly 2.9 million children above the poverty line. Then the expansion lapsed. Child poverty went back up. We turned the policy on and watched poverty fall by half. We turned it off and watched it come back. That is a controlled experiment we ran on ourselves, and the result was not ambiguous. We could do it again, permanently — a universal child allowance, like every other OECD country.

There’s more on the table than that. We could let the government negotiate drug prices for more than just Medicare, and plow the savings into subsidized childcare — because the arithmetic of childcare won’t close any other way. We could tax the capital gains that flow disproportionately to the top and use the revenue to build a sovereign wealth fund that pays every American a dividend, like the Alaska Permanent Fund already does in a red state. We could make it easier for workers to unionize and bargain across whole sectors instead of firm by exhausting firm.

These aren’t exotic ideas. Worker ownership exists in America — 15 million people are in employee stock ownership plans right now, with Republican champions and over $2 trillion in assets. Sectoral bargaining is how most of Europe organizes wages. A child allowance is how we did it ourselves, five years ago, before we chose to stop. The pieces are on the table. What’s missing is the will to arrange them.

I’ll concede the hard part, because I owe you that much: none of this is simple to build here. American institutions — federalism, weak parties, campaign finance, two centuries of racial divisions used to fracture working-class solidarity — make every structural reform heavier than it looks from Copenhagen. The policy is the tip; the institutions are the iceberg. But the iceberg argument cuts both ways: if the institutions are the reason the distribution looks like this, then the institutions are where the work lives.

We could do these things, and we would not wake up in a command economy. We would wake up in a country where a month of growth doesn’t also mean a month of falling behind for nine out of ten people.

My aunt in Gothenburg has never once worried about a hospital bill. She pays a 25% VAT on most purchases, a 6% rate on her groceries, and doesn’t consider any of it a price for her soul. She considers it the price of a society where the gains of growth are broadly shared, not captured by the people who already have the most. That’s not utopia; it’s just a choice.

The economy is a set of human choices. Somebody built this one. Somebody could build it differently.

Anyway.