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What would America look like if the gap between worker pay and productivity hadn’t opened? A RAND Corporation study from earlier this year found that the bottom 90 percent of wage earners received about 67 percent of all taxable income in 1975. In 2019, the last year for which this data was available, they received 46.8 percent. Had that bottom 90 percent continued during the past half-century to make the same share of the national income they’d had in 1975, RAND calculates that by 2023 they would have made an additional $79 trillion. Just in the year 2023, they would have made an additional $3.9 trillion. As the size of the bottom 90 percent of the U.S. workforce is roughly 140 million people, that means that the average earner would have made about $28,000 more in 2023 than they actually did.

Where have all those missing $28,000 paychecks gone? Well, our nation was home to 1,135 billionaires this year, whose aggregate net worth in 2024 came to a cozy $5.7 trillion. That’s $1.8 trillion more than what it would take to cut 140 million $28,000 paychecks.

Corporations aren’t cutting those checks. As EPI’s Nominal Wage Tracker documents, the 80 percent of corporate income that went to employees in 1980 declined to 71.5 percent this year.

This is the kind of thing that can irritate workers. As I write in mid-November, 3,200 members of the Machinists union have just completed a three-month strike at three Midwestern Boeing plants. Strikers noted that Boeing devoted $68 billion to stock buybacks between 2010 and 2024—funds that could have gone to developing safer and better planes, and better-compensated workers with more secure retirement benefits.

THERE’S A REASON WHY 1979 HAS BECOME the last “postwar normal” year, before the massive upward redistribution of wealth and income, in most of these economic studies. In 1980, Ronald Reagan was elected president. In his first few months in office, he signed a law reducing the top income tax rate from 70 percent to 50 percent. (It’s about ten points lower than that today, though most of our super-rich have found ways to get it much closer to zero.) The high marginal tax rates of the postwar decades, peaking at 91 percent during Republican Dwight Eisenhower’s presidency, had effectively put a ceiling on CEO pay. Tesla’s board would not be committing to pay Elon Musk a trillion bucks if Tesla thrives in the coming years under 1950s-era tax rates, where the feds would take the lion’s share above the top marginal bracket. The pre-Reagan tax rates ensured that America’s billionaires would be few and far between, helping to ensure that workers’ potential income wouldn’t be siphoned upward. Twenty years after Reagan, George W. Bush became the first president to lower taxes on the rich during wartime (a war he decided to start absent a plausible threat), and Donald Trump’s successive cuts make even Reagan and Bush look like Keynesians.
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