One of my favorite moments in Harry Potter and the Order of the Phoenix involves a pile of documents and a wand. Bill Weasley says “Evanesco,” and the papers vanish. I would gladly try that on the piles around my house.
Treasury Secretary Scott Bessent seems to have attempted a larger disappearing act. As the New York Times reported in August, he declared the K-shaped economy over: the term for an economy in which people at the top pull ahead while those below struggle to keep up.
There is evidence behind part of his argument. The question is whether it supports the word “over.”
The improvement is real. A Bank of America Institute report notes after-tax wage growth for lower-income households reached 5.2% in July, exceeding growth for higher-income households for the first time since December 2024. In August, growth was 4.7% for lower-income households and 3.5% for higher-income households. Spending growth across income groups has also moved closer together. These are welcome developments.
The longer view is less tidy. In April, the Bank of America Institute measured after-tax wage growth of 6.0% for higher-income households and 1.5% for lower-income households. Its more recent reports show a reversal in growth rates, which matters. They do not show that households have arrived at the same financial position. Bank of America also says the top 5% of earners remain an exception to the convergence in spending growth.
Wealth makes the distinction sharper. Federal Reserve data for the second quarter of 2026 show that the wealthiest 10% held 68.9% of household net worth. The bottom half held 2.3%. A few months of stronger wage growth cannot make that divide vanish.
Bessent also pointed to tax relief for workers. Some workers do benefit. Yet the Tax Policy Center estimates that the highest-income 20% of households receive almost 60% of the 2025 law’s tax cuts in 2026. To judge the whole law, we have to look beyond its best-known provisions.
The Parting Glass
Bessent is right to call attention to better wage growth for lower-income households. He is wrong to treat that improvement as proof that the broader divide has disappeared. “Evanesco” works wonderfully in fiction. In an economy, we have to look at what is still on the table.
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