Obama’s latest proposals to increase taxes on individuals earning over $200,000 and to end corporate tax deductions to pay for his proposed American Jobs Act has been attacked by Republicans as class warfare. But for me, it made me want to know more specifically what the numbers show about inequality in America?
Economic reporter Paul Solomon has an interesting series on PBS on the inequality in the United States. If you haven’t seen it, I recommend viewing the videos, including the one that features economist Robert Lerman, a former colleague of mine at the U.S. Department of Labor. Lerman’s point is that when we factor in Social Security and Medicare rights and benefits, inequality doesn’t look as bad.
While the PBS series is good at giving us a view of people in distress and a glimpse of how the rich live, it is not really clear on statistics and sources.
Here I want to report on some of the latest statistics on the American income distribution and what has happened to it since 1967.
The numbers come from a recent U.S. Bureau of Census report on income. The data used for the estimates in the report are from the Current Population Survey, the same survey that is used to estimate the unemployment rate.
To find a quick way of seeing what the data tell us about inequality and whether it has increased in the United States, I looked at the percentage of all U.S. household income that goes to households that are in the lowest 20 percent of the income distribution and compared it to the percentage of all U.S. household income that goes to households at the highest 20 percent of distribution.
Below are some numbers from Table A.1 of the Census report. They show a steady increase in income shares going to higher income households. It is clear to me that this signals an increase in income inequality in the United States since the 1960s. Whether we have too much inequality is a separate issue entirely.
Share of all U.S.Household Income of lowest and highest income households
% Of All U.S. Household Income
Year To lowest 20% To highest 20%
1967 4.0 43.6
1977 4.2 44.0
1988 3.8 46.3
1999 3.6 49.4
2010 3.3 50.2
Source: U.S.Bureau of Census Current Population Survey