US – The broad facts of income inequality over the past six decades

The broad facts of income inequality over the past six decades are easily summarized:

• The years from the end of World War II into the 1970s were ones of substantial economic growth and broadly shared prosperity.
  • Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s.
  • The income gap between those high up the income ladder and those on the middle and lower rungs — while substantial — did not change much during this period.
• Beginning in the 1970s, economic growth slowed and the income gap widened.
  • Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly.
  • The concentration of income at the very top of the distribution rose to levels last seen more than 80 years ago (during the “Roaring Twenties”).
• Wealth — the value of a household’s property and financial assets, minus the value of its debts — is much more highly concentrated than income.  The best survey data show that the top 3 percent of the distribution hold over halfof all wealth.  Other research suggests that most of that is held by an even smaller percentage at the very top, whose share has been rising over the last three decades.

Data from a variety of sources contribute to this broad picture of strong growth and shared prosperity for the early postwar period, followed by slower growth and growing inequality since the 1970s.  Within these broad trends, however, different data tell slightly different parts of the story (and no single source of data is better for all purposes than the others).

This guide consists of four sections.  The first describes the commonly used sources and statistics on income and discusses their relative strengths and limitations in understanding trends in income and inequality.  The second provides an overview of the trends revealed in those key data sources.  The third and fourth sections supply additional information on wealth, which complements the income data as a measure of how the most well-off Americans are doing, and poverty, which measures how the least well-off Americans are doing.

Chosen excerpts by Job Market Monitor. Read the whole story at A Guide to Statistics on Historical Trends in Income Inequality — Center on Budget and Policy Priorities.