Income Distribution Changes

Posted in General Musings at 9:48 pm

Interesting stats on income distribution changes in the US:


See Table 5.

In 1980, the Top 50% earned 82.32% of all income compared to the Bottom 50%’s 17.68. By 2007, that was skewed to 87.74% and 12.26.

No surprise there, it’s well known that most of the income gains in the US over that period went to higher earners.

What is surprising is how small a sliver of the population actually saw an increase in income share.

Those in the “Between 26% and 50%” category went DOWN from 25.62% to 19.04%. So that huge gain made by the Top 50% must have come from the top 25%, since the other half of the top 50% actually lost out.

Top 25%
1980 – 56.70%
2007 – 68.71%

But wait, the “Between 11% and 25%” category ALSO went DOWN from 24.57% to 20.66%.

So ALL of the gains must have come only from the top 10%.

But wait, the “Between 6% and 10%” category ALSO went DOWN from 11.12% to 10.61%.

Thus, the ENTIRE gain made by the top 50% in reality came from the top 5%.

Let’s break that down further.

The “Between 2% and 5%” category went from 12.55% to 14.61%. That’s a gain, but just barely.

Almost the entire gain made by the top 50% in reality came from the top 1%.

The top 1% went from 8.46% to 22.83% of all income. Wow.

Let’s break that down further. Unfortunately, we only have data on the top 0.1% of income earners going back to 2001. But for that subset of the data, we can see that those in the “Between .1% and 1%” category went from 9.43% to 10.9%, which isn’t much. Extrapolating back to 1980, it looks like the top 0.1% went from around 3% of all income to around 12% in 2007.

In other words, almost all of the difference in income distribution can be accounted for by those in the top 0.1% of income earners.

For the record:

Top 5% = >$160k
Top 1% = >$410k
Top 0.1% = >$2.2 million

In summary, from 1980 to 2007 the share of income earned by the various percentiles changed as follows:

  • For the lowest 95% of the population (<$160k in income), meaning almost everyone, it went down.
  • For the next 4.9% of the population ($160k-$410k), it went up slightly.
  • For the top 0.1% of the population (>$2.2 million) it went way up.

On a related note, MarketWatch had a related release the other day:


Inflation adjusted median wages for both high school graduates and college graduates have fallen over the past 10 years.

Median weekly wages, when adjusted for inflation, fell slightly for both high school and college graduates from 2000 to 2009, according to a recent analysis by the Economic Policy Institute, a Washington think tank.

“The story is often told that college graduates have done well and everyone else has not. But that’s not true,” said Josh Bivens, an economist at EPI.

For high school graduates, median inflation-adjusted wages were $626 per week in 2009, compared with $629 in 2000, according to EPI. If you assume a worker gets paid for a full year, that adds up to $32,552 in 2009, down from $32,708 in 2000.

For college graduates, weekly wages were $1,025 in 2009, compared with $1,030 in 2000, according to EPI. Over one year, that works out to $53,300 last year, down from $53,560 in 2000.

A decade of stagnant median wages across the board, with virtually all gains in national income going to the top 1%.


  1. liberal said,

    07.10.10 at 2:31 am

    I wonder how much of it is related to increasing fraction of GDP going to FIRE since 1980. More generally, how much due to income going to parasitic rent collection.

  2. RueTheDay said,

    07.10.10 at 10:59 am

    liberal – If you think about who makes up the 0.1% tier, I’d say the answer to both of your questions is “almost all of it”.

  3. Reliv Reps – What Top Income Earners Do For Fun In Costa Rica said,

    07.10.10 at 11:46 am

    [...] Disequilibria: A Constant State Of Instability » Income Distribution Changes [...]

  4. cm said,

    07.15.10 at 3:59 pm

    Using this inflation calculator:


    The minimum AGI for the top 50% (median income) was $12,936 in 1980 and would be worth $32,157 in 2007.

    The minimum AGI for the top 50% in 2007 was $32,879.

    Not much of a ‘real’ gain over 27 years.

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