Income and Inequality in the United States: A Review through 2008
A first glimpse at income trends in the United States doesn’t reveal anything a person would complain about:
From 1967 to 2007, median household income in this country rose 25%, and that’s in real, inflation-adjusted dollars. It seems like a great trend, and from this graph alone one might be tempted to clap, cheer and conclude that all is well. But within this overall rise in income, different sorts of people have had very different sorts of economic experiences.
Our first hint that not all is peachy keen is the poverty rate, which has remained essentially the same since 1967:
As of 2008, the poor are the 13.2% share of the population with the least income. If we don’t want to restrict our gaze to the poor, we could think of other portions of the population according to their income, too. The U.S. Census Bureau divides American households up into five ordered groups of 20% called quintiles. The “highest” quintile is the 20% of American households with the highest income, the “lowest” quintile is the 20% of the population with the least income, and the other three quintiles lie in between these extremes. Below is a chart drawn from Census data showing the average household income of each of those quintiles from 1967-2008, measured in 2008 dollars to eliminate the effect of inflation:
The lowest income quartile saw its average annual household income rise by $2,637.82 between 1967 and 2008. The 2nd-lowest income quartile had a $4,531.00 increase in its average annual household income over the same period. Meanwhile, the average income of the 3rd quartile went up $10,243.45, and the average income of the 4th quintile went up $23,948.73. The top income quartile’s average income went up $70,617.00 from 1967-2008. And if we look at a smaller group — the top 5% of households in income — we find that this group’s average annual income shot up by $136,270.82 from 1967-2008.
It’s worth noting that every quintile’s annual income increased during the period, a trend which punctures the depressive assertion that economic conditions are always getting worse. But the first two quintiles had only negligible gains in income, while the top 5% of households’ average increase in income is more than ten times greater than the bottom quintile’s average total income. The rich are getting richer in America, a whole lot more quickly than everybody else.
This sort of thing matters when you think about power in America. Power comes from the use of resources, and resources in America are becoming more and more concentrated at the top. in 1967, the top 20% of income earners earned 43.6% of all income. By 2008, that share had increased to 50%. From 1967 to 2008, the income share of the top 5% grew from 17.2% to 21.5%. As power concentrates at the top of the income pyramid, regulations to restrict the use of that power in politics are falling away. Corporations constituted from the invested wealth of the very richest Americans gained free rein this year to give unlimited sums to politicians for their campaigns. A very small number of very well-endowed corporate groups and individual wealthy givers are dominating congressional politics this year with their donations, donations they are more capable of making than ever before, even as this country remains mired in a recession. The more that income inequality grows, the more we can expect our politics to be dominated by the agenda of the already well-off. That agenda might be cloaked in economic populism, but the perpetuation of economic elitism is its aim.
The latest data on income and income inequality in the United States will be released by the Census Bureau this Thursday. Will the gulf between the Have Mosts and the Have Leasts grow wider still?