5. $33,484
$92,050
Typical Oregonian would earn nearly 3 times as
much had inequality remained at 1980 level
2014 median income at 1980 inequality level
Actual 2014
median income
6. 34%
21%
45%
Top 1/10th of 1
percent
Rest of
top 1 percent
Bottom 99
percent
Capital gains income flows mainly to the top
9. Oregon can confront income inequality:
• Invest in Oregon’s human capital;
• Invest in Oregon’s infrastructure;
• Pay for those investments by asking
more from those at the top;
• Ask corporations to pay more.
Editor's Notes
Thank you all for joining us this morning. As Chuck mentioned, tomorrow we will be releasing an update to our fact sheet on income inequality. I’ll walk folks through the findings in more detail in just a moment, but the big takeaway is this: The incomes of a select group - Oregon’s top one-tenth of 1 percent - stand just below their all-time high. At the top of the income ladder it looks like the Great Recession never happened. But for the typical Oregonian, she remains stuck in the recession era.
With that in mind, let’s jump in to the findings of tomorrow’s report. In front of you now, you should have a title slide that reads, “Outsized Gains at the Top Worsen Oregon Income Inequality.” I’ll let folks know when to click ahead as we move through the slides. Let’s click ahead to the first chart.
Income inequality has been on the rise in Oregon for more than three decades with the top 1 percent of earners seeing their incomes soar while the typical Oregonian has seen her income stagnate.
You’ll see from the red line, that from 1980 to 2014, the average income of the top 1 percent nearly tripled from $327,000 to $907,000 after adjusting for inflation.
Meanwhile, the Oregonian in the middle, shown here with the flat blue line, earned just $33,500 in 2014. That’s a mere $270 increase from her inflation-adjusted income in 1980.
In other words, the Oregonian in the middle has barely seen any increase in her income over the last 30+ years.
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To be among the top 1 percent of earners in Oregon in 2014 (the year with the most recent data), a taxpayer had to earn at least $368,109. Their average income was $907,000 that year, nearly triple its inflation-adjusted average income in 1980 of $327,000.
Meanwhile, the income of the typical (median) Oregonian stagnated. The median Oregon income was $33,484 in 2014, just $270 higher than in 1980 after adjusting for inflation. Unless otherwise noted, income figures in this publication are OCPP calculations based on Oregon Department of Revenue data and “income” is adjusted gross income for all income tax filers.
Oregon’s median income in 1980 was $33,214 in 2014 dollars.
The growth of the income of the 1 percent has been driven largely by the gains of a small group of Oregonians – the top 1/10th of 1 percent. The income gains of this select group, as you can see in the red line here, are approaching record levels in Oregon.
Some 1,680 households made up the top 1/10th of 1 percent in Oregon in 2014. Their average income was $3.9 million that year. That’s the second-highest average income for that group on record, trailing only 2012 when they earned $4.0 million on average.
It may look like the gains of the rest of the 1 percent, represented by the blue line below, have been more modest. But the rest of the 1 percent has done quite well too. From 1980 to 2014, the average income of the rest of the 1 percent more than doubled. The fact that these gains look more modest here is a result of the sheer scale of the gains of the top 1/10th of 1 percent. Again, the income gains of that select group are just a hair below record levels.
[next slide]
The income of those at the very top of the income ladder — the top one-tenth of 1 percent — has returned to near record levels.
To be among the 1,680 households in the top one-tenth of 1 percent in 2014, a taxpayer needed to earn at least $1,457,000. The average income of this top group was $3.9 million, just below its record high of $4.0 million in 2012.
While this tiny group has largely fueled the rise of the top 1 percent as a whole, the rest of the top 1 percent saw their average inflation-adjusted income more than double between 1980 and 2014. Calculations for top one-tenth of 1 percent and the rest of the top 1 percent are based on total income for full-year returns.
The average income of the rest of the top 1 percent was $283,711 in 1980 and $622,969 in 2014.
You’ve likely heard in the press that Oregon’s economy is doing quite well. And that’s true. By many measures, Oregon’s economy has seen a strong recovery from the depths of the Great Recession.
But for the typical Oregonian, the recovery has been anything but stellar. In fact, the Oregonian in the middle has seen just a $21 increase in their income since 2009 which you can see in that tiny sliver of a bar on the right. The top 1/10th of 1 percent, the dark red bar on the left, has seen their average income increase by more than $1 million.
Put differently, since the end of the Great Recession, a person in the top 1/10th of 1 percent has seen their income increase enough to buy a very nice second home, while the typical Oregonian’s increase is not enough to fill their car with a single tank of gas.
[next slide]
The Great Recession officially ended in 2009. Since then, the average income of the top one-tenth of 1 percent in Oregon increased by about $1,132,000 after adjusting for inflation. The rest of the top 1 percent saw their income increase by about $124,000.
Over that same time period, the typical Oregonian saw just a $21 increase in income.
The typical Oregonian earns far less today than if income inequality had not worsened since 1980. In fact, if the income of the Oregonian in the middle had kept pace with the gains of the top 1 percent, she would have earned more than $92,000 in 2014. In reality she earned $33,484.
[next slide]
The typical Oregonian earns far less today than if income inequality had not worsened since 1980.
In 1980, the median household income was 10.1 percent of the average income of the top 1 percent in Oregon. By 2014, due to income gains by those at the top, median income shrunk to 3.7 percent of the average income of the top 1 percent.
Had median household income remained at 10.1 percent of the average income of the top 1 percent, the typical Oregonian would have earned $92,050 in 2014.
Part of the story of the rise in the income of the top 1 percent is how they make their money. For example, as you can see in this pie chart, in 2014 the top 1 percent earned more than half of all the income from capital gains, the profitable sale of assets such as stocks, bonds and real estate. You can see that represented here by the dark and light red slices of the overall pie.
But the income from capital gains is even more concentrated than that. The top 1/10th of 1 percent, shown here in the dark red slice, enjoyed more than a third of all the income from capital gains in 2014.
[next slide]
Much of the income of the top one tenth of 1 percent comes from capital gains income — the income from the profitable sale of assets such as stocks, bonds and real estate.
This tiny sliver of Oregonians at the very top together captured 34 percent of all capital gains income in 2014. They and the rest of the top 1 percent together received more than half (55 percent) of all capital gains income that year.
It’s also important to consider the share of all income going to low- and moderate-income Oregonians compared to those at the top. If you look at the left side of the chart, it used to be, back in 1980, that the bottom 40 percent of Oregonians together earned 10.1 percent of all income in Oregon while the top 1 percent earned 7.4 percent of all income.
If you look at the right side of the chart and flash forward to 2014 and you see that the share of all income earned by the bottom 40 percent of Oregonians has shrunk to 7.4 percent while the share going to the top 1 percent has more than doubled.
To think about it another way, the combined incomes of the fewer than 20,000 Oregonians that make up the top 1 percent are now collectively more than twice the combined incomes of the 743,000 Oregonians that comprise the bottom 40 percent.
[next slide]
In 1980, the bottom 40 percent of taxpayers collected 10.1 percent of all income earned in Oregon while the top 1 percent took home 7.4 percent of all income.
By 2014, the bottom 40 percent’s share of total income had shrunk to 7.4 percent while the top 1 percent’s more than doubled to 15.5 percent.
The income gains by the top 1 percent meant that in 2014 they earned more than twice what all Oregonians in the bottom 40 percent earned. In 2014, 19,426 tax filers made up the top 1 percent in Oregon. Excluding negative tax returns, 743,777 tax filers made up the bottom 40 percent. OCPP analysis of Oregon Department of Revenue data.
That trend is evident when you look at the change in income share by income group since 1980. Here you see a completely lopsided picture. Since 1980 the top 1 percent, shown here in the dark red bar on the right, has seen their share of income more than double. The next 19 percent, represented by the smaller light red bar, are the only other group that saw an increase in their share of income over that time.
All other Oregonians, the bottom 80 percent of Oregonians, have seen their share of all income in the state decline over the last 30+ years. The further down the income ladder, the more severe the decline in income share.
Rising income inequality is perhaps the biggest socioeconomic challenge facing our state today. Not only does it mean that the typical Oregonian struggles to afford the rising costs of housing, child care and other necessities, but research shows that income inequality may be hurting the long-term economic prospects for Oregon.
In our paper we call on Oregon lawmakers to act to reduce income inequality. We outline four action items for lawmakers to take to do that.
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Oregon’s top 1 percent has seen their share of total state income more than double over recent decades, increasing by 109 percent from 1980 to 2014.
The bottom 80 percent of Oregonians saw declines in their share of total income over that same time. The further down the income ladder, the more severe the decline in income share.
In addition to the top 1 percent, the next 19 percent was the only other group to see an increase in its share of Oregon income, a modest 5 percent increase from 1980 to 2014. Tax returns with negative adjusted gross income have been excluded.
Invest in Oregon’s human capital, ramping up investments in the education, job skills and health of Oregonians and specifically investing in affordable child care.
Invest in Oregon’s infrastructure, repairing and upgrading roads, public transportation, school buildings and sewer systems, for example.
Pay for those investments by asking more from those at the top.
Ask corporations to pay more.
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