Posts Tagged ‘Income Inequality Series’

Exploring Income Inequality, Part 5: The Concentration of Income and Wealth

December 2, 2011 at 2:57 pm

Yesterday’s post illustrated the magnitude of the income gap.  Today, we’ll take a closer look at the distribution of income and wealth, focusing especially on the share accruing to the top 1 percent.

As the slideshow below shows, the share of the nation’s before-tax income going to the richest 1 percent of households has been rising since the late 1970s and in the past decade has climbed to levels last seen in the 1920s.  Wealth is even more concentrated.

The slideshow is based on research from economists Thomas Piketty and Emmanuel Saez, who examine IRS data on the highest-income taxpayers, and from economist Edward Wolff, who analyzes trends in wealth using data from the Federal Reserve’s Survey of Consumer Finance.  (See our guide for more information on these data sources and historical trends.)

While the recent recession caused a sharp drop in the share of income and wealth in the top 1 percent, the surge in corporate profits and the recovery of the stock market since 2009 suggest that incomes at the top will recover quickly in the coming years, as they did following the dot-com collapse of the early 2000s.

Thank you for tuning into the series; we’ll combine all of the slides into a single slideshow for easier viewing and post it on the CBPP website (  Stay tuned for future analyses.

Exploring Income Inequality, Part 4: More on the Widening of Inequality Since the 1970s

December 1, 2011 at 1:38 pm

Yesterday’s post in our series showed that average incomes nearly quadrupled between 1979 and 2007 for the top 1 percent of households, while growing much more modestly for households in the middle and bottom of the distribution.

Today, we’ll take a closer look at average households at different points in the income distribution, using Congressional Budget Office estimates of average after-tax incomes from 1979 to 2007, adjusted for inflation.  (See our guide for more information on data sources and historical trends.)  Pay attention to the scale of these charts to truly understand the magnitude of the income gap.

Tomorrow, we’ll take a look at the concentration of income and wealth.

Exploring Income Inequality, Part 3: Widening Inequality Since the 1970s

November 30, 2011 at 10:51 am

Yesterday’s post showed that the era of shared prosperity ended in the 1970s and highlighted the widening of income inequality since then.  Today, we’ll take a look at what has happened to income since 1979, using the comprehensive data in the Congressional Budget Office’s (CBO) recent report on inequality.

As the slideshow below shows, average after-tax incomes for households in the top 1 percent of the distribution nearly quadrupled between 1979 and 2007, after adjusting for inflation.  That compares with increases of about 40 percent for the middle three-fifths of the distribution and just 18 percent for the bottom fifth.

The CBO data shown here reflect a more comprehensive income definition than the Census data that we showed yesterday. As we explain in our guide, CBO uses a broader measure of income than either Census or tax return data alone can capture.

Tomorrow, we’ll take a closer look at incomes over the 1979-2007 period.

Exploring Income Inequality, Part 2: The Loss of Shared Prosperity

November 29, 2011 at 2:35 pm

The slideshow below — the first in this week’s series on income inequality — shows that the years from the end of World War II into the early 1970s saw substantial income growth and broadly shared prosperity.  But this trend ended in the early 1970s, when income disparities started widening as incomes began to grow much faster at the top than in the middle or bottom.

The slideshow presents family income data from the Census Bureau.  While these data are useful for illustrating the widening of income inequality beginning in the 1970s, other data are superior for assessing more recent trends, as we explain in our new guide on examining income inequality.

Tomorrow, we’ll examine income growth in recent decades.

Exploring Income Inequality, Part 1: Overview

November 28, 2011 at 5:00 pm

To provide some historical context to the current public discussion of income inequality, we’re releasing a series of posts this week that examine trends in income inequality in recent decades and outline different data sources to examine the issue.

The broad facts of income inequality over the past six decades are easy to summarize:

  • The years from the end of World War II into the 1970s saw substantial economic growth and broadly shared prosperity.
    • Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s.
    • The income gap between those high up the income ladder and those on the middle and lower rungs — while substantial — did not change much during this period.
  • Beginning in the 1970s, economic growth slowed and the income gap widened.
    • Income growth for households in the middle and lower rungs of the ladder slowed sharply, while incomes at the top continued togrow strongly.
    • The concentration of income at the very top rose to levels last seen more than 80 years ago, during the “Roaring Twenties.”
  • Wealth is much more highly concentrated than income, although the wealth data do not show a dramatic increase in concentration at the very top the way the income data do.

This broad overview reflects data from a variety of sources.  Different data sources tell different parts of the story; no single source is best for all purposes.  CBPP issued a guide today that discusses the strengths and limitations of various data sources in understanding trends in income and inequality.  It also highlights the trends that those key data sources reveal and gives additional information on poverty measurement and the distribution of wealth.

Stay tuned.  The next post in this series will look at income growth in the post-World War II decades and the widening of income disparities starting in the 1970s.