Last week, UC-Berkeley economist Emmanuel Saez was awarded the 2009 John Bates Clark Medal--given on alternate years by the American Economic Association to the best economist under the age of forty.  Peter Orszag, director of the Office of Management and Budget--who has worked with Saez--has a short appreciation on the OMB's website.  Orszag notes Saez's work on wages for the top 10 percent of American earners.  Saez and Thomas Piketty discovered a "U-shaped pattern" for wages among top earners in the 20th Century.  The share of income that went to the top 10% neared 50% of total US income in the Twenties, went down during World War II, then climbed back up at the end of the century and then reached 50% in 2006.  Orszag provides this graph that charts wages for the top 10%, 5%, and 1%:

And in the most recent past, the very highest earners did very well indeed, capturing almost three-quarters of total income growth in the economic expansion of 2002 to 2006, while the remaining 99 percent of the U.S. population split among themselves the final 25 percent of the increase. (What makes this trend all the more concerning is something that Emmanuel and his co-authors demonstrated in another paper: that this dramatic increase in incomes at the very top has not been mitigated by an increase in income mobility, which can be seen in the relatively stable probability of staying in the top 1 percent of earners from one year to the next since the early 1970s.)

Emmanuel's work on income inequality has helped to point the way for the Administration in its pledge to rebalance the tax code, with a tax cut going to 95 percent of working Americans while asking those at the very top to contribute more. The inequality that has arisen over the past three decades is not going to go away overnight, and it has been driven by many factors—including a decline in the growth rate of college-educated workers. But where the prior administration used changes in the tax code to exacerbate these trends, this Administration thinks that the tax code should be used to mitigate them because an economy in which all can enjoy success is one that is strong for us all.

Read Orszag's post here.