This paper constructs high-frequency and timely income distributions for the United States. We develop a methodology to combine the information contained in high-frequency public data sources—including monthly household and employment surveys, quarterly censuses of employment and wages, and monthly and quarterly national accounts statistics—in a unified
framework. This allows us to estimate economic growth by income groups, race, and gender consistent with quarterly releases of macroeconomic growth, and to track the distributional impacts of government policies during and in the aftermath of recessions in real time. We test and successfully validate our methodology by implementing it retrospectively back to 1976. Analyzing the Covid-19 pandemic, we find that all income groups recovered their pre-crisis pretax income level within 20 months of the beginning of the recession. Although the recovery was primarily driven by jobs rather than wage growth, wages experienced significant gains at the bottom of the distribution, highlighting the equalizing effects of tight labor markets. After accounting for taxes and cash transfers, real disposable income for the bottom 50% was 20% higher in 2021 than in 2019, but fell in the first half of 2022 as the expansion of the welfare state during the pandemic was rolled back. All estimates are available at //realtimeinequality.org and are updated with each quarterly release of the national accounts, within a few hours.
KEY-FINDINGS
- All social groups recovered their real pre-crisis pretax income levels within 20 months of the start of the Covid recession. The recovery was much more equal than the recovery from the Great Recession of 2008–2009, during which it had taken nearly 10 years for the bottom 50% to recover its pre-crisis pretax income level.
- Labor earnings experienced significant gains at the bottom of the labor income distribution during the Covid recovery, in a context of loose monetary policy until the spring of 2022 and tight labor market.
- Government programs enacted during the pandemic led to an unprecedented—but short-lived—improvements in living standards for the working class. After accounting for taxes and cash and quasi-cash transfers, disposable income for adults in the bottom 50% was 20% higher in 2021 than in 2019. However, disposable income fell in the beginning of 2022 and then flatlined, as the expansion of the welfare state enacted during the pandemic—e.g., an expanded child tax credit and earned income tax credit—was rolled back.
AUTHORS
- Thomas Blanchet, University of California, Paris School of Economics,
thomas.blanchet@icloud.com - Emmanuel Saez, Department of Economics, University of California, Berkeley, saez@econ.berkeley.edu
- Gabriel Zucman, Department of Economics, University of California, Berkeley, zucman@berkeley.edu
MEDIA CONTACT
- press@wid.world.com
ACKNOWLEDGEMENTS
We thank Akcan Balkir and James Feng for outstanding research assistance, and Heather Boushey, Dennis Fixler, Marina Gindelsky, Damon Jones, Robert Kornfeld, Greg Leiserson, Danny Yagan, and numerous conference participants for helpful comments and reactions. We acknowledge financial support from the Center for Equitable Growth at UC Berkeley, the Carnegie Foundation, NSF grant SES- 1559014, the Stone Foundation, and the European Research Council. This paper is supplemented by a website, //realtimeinequality.org, with timely inequality and distributional growth estimates updated every quarter and detailed visualizations. All our data and programs are also posted online at this address. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
