In the first phase, the great compression, inequality fell.
Incomes rose for people in the bottom 90% of the income distribution, as the postwar boom led to high demand for workers with low and moderate skills, while income was basically stagnant for the top 1% of earners.In the last 35 years, the reverse occurred. Top marginal tax rates fell sharply. Incomes rose for those in the top 1 percent, largely driven by rapidly rising pay for top executives. At the same time, a combination of global competition, automation, and declining union membership, among other factors, led to stagnant wages for most workers. In theory, it should be possible for incomes to rise for everyone at the same time — for the gains of economic growth to be broadly distributed year after year. But the takeaway from these graphs is that since World War II, that's never really happened in the U.S.