Two days ago, I prepared for today’s release of new 2009 Census income inequality data by looking at the record historically, namely the average household income of each income quintile from 1967 to 2008:
The top quintile is the fifth of the population that earned the highest income in 2008; the lowest quintile is the fifth of the population that earned the lowest income in 2008. The chart can be interpreted by considering that in a state of absolute income equality, each quintile would have the same income as any other (20% of the total). The amount of departure from this hypothetical state is the amount of income inequality — and the amount of concentrated power in the United States.
Yesterday, the U.S. Congress’ Joint Economic Committee issued a report revealing the pattern of growing economic inequality in greater detail. How much of all income was gained by the top 1% in income (the top hundredth)? By the top 0.1% in income (the top thousandth)? An extracted figure:
One thousandth of the U.S. population raked in 10% of all U.S. income in 2008. Think about that. Think about what kind of power that much income brings.
The Joint Economic Committee gets one thing wrong in that figure. They refer to “wealth,” but this is just a pattern of annual income. Wealth is different: it is income that accumulates over time. At the bottom of the money pyramid, people spend all their income every year just to get by. In the middle of the money pyramid, some saving might be had in good years, but often savings are dipped into in the middle years. At the top of the money pyramid, it is actually a challenge to think up ways to spend all the money that comes in, and so a great share of income is accumulated as wealth. If we were to look at the share of wealth accumulated by the most wealthy 0.1% of the U.S. population, we’d see that the portion of all American wealth held by that group is quite a bit higher than 10%.