Latest Posts
Home > Debt Articles > The Exploding Income Gap

The Exploding Income Gap

by Braden Goyette, ProPublica

The nonpartisan Congressional Budget Office recently released a much-discussed study showing that over the past three decades the income of the highest-paid Americans has soared while the income of others has grown much more modestly. Here’s a rundown of some statistics illustrating the growing income gap.

But first, some context. These numbers reflect income, not wealth. So a retiree who owns two houses and three cars may be far better off than someone with a higher annual income, two kids in college and a mortgage. It’s worth noting that income includes investment income and capital gains.

Also, although a 2010 Organization for Economic Cooperation and Development study suggests that there is less income mobility [PDF] in the United States than in many other developed countries, someone in the richest 1 percent this year may have been in an entirely different category 30 years ago. Take Bill Gates. In 1979, Gates was 24, and Microsoft hadn’t even incorporated. He was likely in the bottom tier of earners.  More recently, of course, he has easily been in the top 1 percent. According to a 2007 Treasury Department study [PDF], “roughly half of taxpayers who began in the bottom income quintile in 1996 moved up to a higher income group by 2005.”

Third, though income growth has been unequally distributed, real income for all groups has grown over the past three decades.

In spite of those caveats, the gap between richest and poorest is far greater than it used to be. All income numbers have been adjusted for inflation, and all household income data are adjusted for differences in household size [PDF; see Appendix A]. Please note that different subsections take different years as a baseline.

 

Overall income growth for the country as a whole

Disposable personal income per capita:

1980 $18,822
1990 $23,542
2000 $28,911
2010 $33,125

 

All figures in constant 2005 dollars. Source: Census.gov

 

Unevenly distributed growth

Top 1% of Households 275%
Poorest Fifth of Households 18.3%
Middle Fifth of Households 35.2%

 

Source: Congressional Budget Office

 

 

  1979 2007
Top 1% of Households 10.5% 21.3%
Poorest Fifth of Households 2.9% 2.5%
Middle Three Fifths of Households 47.8% 38.5%

 

Source: Congressional Budget Office

 

Large gains for the highest earners, modest gains for the rest

  1980 1990 2000 2007
Top 1% of Households $339,200 $586,000 $1,038,700 $1,319,700
Poorest Fifth of Households $14,800 $14,800 $16,500 $17,700
Middle Fifth of Households $42,600 $45,000 $50,400 $55,300

 

All figures in constant 2007 dollars. Source: Congressional Budget Office

 

Decline in median individual income for men, slight gains for women throughout the 2000s

  1995 2000 2005 2010
Men $32,051 $35,885 $34,929 $32,137
Women $17,232 $20,338 $20,747 $20,831

 

All figures in constant 2010 dollars. Source: Census.gov

 

Comparison to other countries

Income inequality on a scale from 0 to 1, 1 being the most unequal:

France 0.239
Poland 0.305
Greece 0.307
United States 0.378
Mexico 0.476

 

Source: Bertelsmann Stiftung


The Exploding Income Gap by

Share This and Spread the Word

About ProPublica

ProPublica

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.

Close

I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.


  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.