Thursday, February 27, 2014

Graphs on Inome Inequality

A graph that has been doing the rounds, lately.
And here:
And here:

 The source is:

The World Top Incomes Database:

This is my own version, taken from an EXCEL download of the relevant data, the graph drawn using the EXCEL graphics wizard, (since I couldn’t figure how to copy the graph itself directly to my website.)  All data includes capital gains, which for the bottom 90% isn’t much.  All data is for the United States.

Note that the .01% are doing really well. Their average income is currently at almost $22 Million.  So well, in fact, that we have to redraw the graph with out the top two brackets get some sort of perspective:

With this graph, we can see that the top 10 - 5% bracket have made some progress since oh, say 1985, say,  and the top 5 - 1% a little more.  And the other two brackets have done quite nicely, though, as Washington says, peanuts and chump change respectively compared to the .01%.  If we look at the bottom 90% however, it seems as if their glory days are in the past.  From 1941 or so to 1975 their income more than tripled.  It has remained largely static since then, however, and since the 2007 recession has declined about 15% from its peak. 

Of course, looking at the graph of the top percentages, we could say: “Hey, that’s the income of just a few.  There’s still plenty to go around for the rest of us.”  

But let’s look at that.  Here’s the Share of Total Income for the top percentiles, starting at the top 10%., which we see now take home about 50% of the country’s personal income. (To recover the brackets in the above graphs, take the difference between two adjacent curves.  Thus, the top 10 – 5 % bracket is the difference between the top line and the magenta line, about 12% in 2012, the 5 – 1% bracket the difference between the next two lines, in 2012 about 15%, etc.)   

As is clearer in the next graph, the top 1%  pull in about 23% of the nation’s total personal income.  This is up from a low of about 9% in the late 1970’s. The top .01%, that is the richest 30,000 people or so, in 2012 took down over 5% of the nation’s personal income, up from less than 2% in 1980.

Looking at it share-wise, one person’s share is a share denied another. So where in 1979 the bottom 99% of the population shared 91% of the nation’s production, in 2012 they shared only 77%.  If we consider just the bottom 90% of the population, in 1979 they shared 67% of the nation’s production.  In 2012  the bottom 90%  shared less than 50%. That's a 17% decrease in their share of the nation's production.     But to them, it's a 30% decrease in their income.  That is, instead of $30,000 per year, the bottom 90% would be averaging over $40,000 per year.  

The question for the second 9% is are they doing better than they would it the top 1% had not absconded with so many of the gains.  The answer may be no, and even if it is yes, they have to realize that much of those gains were at the expense of the 90%.