Economic inequality recently has entered the political discourse in a highly visible way. Inequality and “middle-class economics” were the centerpieces of President Obama’s 2015 State of the Union address. Leading potential Republican presidential nominees have also spoken out on the problem of inequality in the United States.

This political impact is not a surprise. As the U.S. economy has begun to recover from the Great Recession since mid-2009, the rising tide has not lifted all boats. To the contrary, median income and wealth both declined in real terms between 2010 and 2013. Over essentially the same period, the real income of the top 1% grew by 31.4%, and the income share of the top 1% increased from 17.2% to 19.8%. The fact that economic growth has effectively been appropriated by those already well off, leaving the median household less well off, raises serious economic, political, and moral issues.

The divergence in economic fortunes between those at the very top and the rest of society is not a temporary phenomenon. Median income has been declining since 2000, well before the start of the Great Recession, while real GDP is more than 25% higher now. The economic position of the richest Americans has improved during the past decade, while most households have struggled or lost ground. In fact, inequality in the United States has been growing since the 1980s. Between 1982 and 2013, the share of income going to the top 1% increased from 12.8% to 19.8%, and the share going to the bottom 40% fell from 12.3% to 9.4%. The average income of the top 1% rose by 90% between 1983 and 2013, while the average income of the bottom 60% declined by more than 4% over the same period. . . .