01 January 2008

Income Inequality

Income inequality, by many measures, is now greater than it has been since the 1920's. The top 1 percent of earners in the United States made 19 percent of all income in 2005, up from 8 percent in 1975, according to an analysis by Emmanuel Saez and Thomas Piketty, two economists.

The causes of inequality are hotly debated and tend to fall into two broad categories. There are market forces - like increased trade and technological advances - which have made highly skilled and well-educated workers more productive, thus increasing their pay. And there are institutional forces, like deregulation, the decline of unions and the stagnation in the minimum wage.

In 1947, the median family - the one making more than half of all other families and less than half of all other families - made $23,400, according to the Economic Policy Institute. Over the next three decades, median-income more than doubled, to $47,400 in 1977. In 2005, the median family made $58,400. (All these numbers are adjusted for inflation.)

Meanwhile, the incomes of earners at the 99.99th percentile of the income distribution -- those making more than 9,999 out of every 10,000 other earners -- have soared over the last three decades, from less than $2 million in the late 1970's to about $10 million now.

So pay has risen for most families in the last 30 years, but as not as quickly as it did in the decades after World War II and not nearly as quickly as it has for the affluent.
-- David Leonhardt, Dec. 16, 2007

New York Times Topics - Income Inequality

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