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  Chapter Nine:
 
MONEY
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  Average Earnings
  Minority Earnings
  Average Incomes
  Personal Consumption
  Philanthropic Donations
  Personal Debt
  Income Distribution
  Poverty
  Inflation

  

 

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MONEY

Income Distribution

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Income inequality decreased throughout much of the century, increased from 1980 to 1995, and then leveled off.
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The upper chart compares the mean income, in 1999 dollars, of families in the upper 5 percent of the national income distribution with the mean income of families in the lower 40 percent of the distribution. Both groups experienced substantial increases in their incomes after 1929, and both suffered a slight loss of income during the 1970s and into the recession of 1982. But after 1982, the two groups diverged markedly. 

The average income of families in the lower 40 percent of the national income distribution increased 12 percent between 1982 and 1998, from $19,243 to $21,520. The picture is quite different for families in the upper 5 percent of the national distribution, however. Between 1982 and 1998, the average income of these affluent families rose 77 percent, from $143,052 to $252,582. 

The lower chart tells this story in a different way. It compares the share of the total income of all American families that went to the affluent families in the upper 5 percent of the income distribution with the share that went to the nonaffluent families in the lower 40 percent of the distribution. In 1929, the aggregate income of the affluent 5 percent was more than twice the aggregate income of the nonaffluent 40 percent. This difference declined and then disappeared until 1985, when the affluent share began to rise again. But in the 1990s, the affluent share stabilized at 21 percent and the nonaffluent share leveled off at 14 percent. 

This development can be plausibly attributed to several factors, including changing family structure, tax policy, global trade, technology, immigration, and the decline of labor unions, but it is exceedingly difficult to determine the relative weights of each factor. Neither chart takes account of noncash income such as health benefits.


Chapter 9 chart 7

Source Notes
Source Abbreviations

HS series G 319, G 323, G 326, and G 330. See also table F-3, “Mean Income Received by Each Fifth and Top 5 Percent of Families (All Races), 1966 to 1998”; table H-2, “Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households (All Races): 1967 to 1999”; and table H-3C, “Mean Income Received by Each Fifth and Top 5 Percent of Households of Hispanic Origin: 1972 to 1999,” at www.census.gov/hhes/income/histinc (accessed August 31, 2000). Also see table F-2, “Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Families (All Races): 1947 to 1998,” at www.census.gov/hhes/income/histinc/f02.html (accessed August 31, 2000). See also John Cassidy, “Who Killed the Middle Class,” New Yorker, October 16, 1995, pages 113–115.

 

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