US Income Inequality 1970-2010

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There is increased attention focused on US income inequality in recent years. It remains a challenge to isolate different contributing factors for this inequality growth over the past generation although some reasons have been cited, such as: increased trade with developing countries, increased income for those with university degrees (only around 30% of the US population), increased role of technology in the economy, etc. This post will not dive into trying to uncover why income inequality is happening, but rather, how the various income groups have been affected since 1970.

Above is a chart displaying the US population grouped into five income brackets. What is clear from the data is for the bottom 80% of US income earners, all groups are receiving a smaller share of total US income than compared to 1970 and 1990. Meanwhile, across this same period, the highest fifth of income-earners in the US have received an increasing share of income compensation – from 43.3% in 1970 to 46.6% in 1990 to 50.3 percent in 2010.

Although, to play devil’s advocate, what makes this issue even more complicated is that individuals are not in the same group over time, it is hard to factor in changes in the quality of goods, or even, the modern luxuries of goods that didn’t even exist 40 years ago such as the internet, smart phones, laptop computers, etc. Even though the percentage of income the bottom 80% of income earners is responsible for has decreased over the period, it’s clear that they are living better lives considering all the improvements in technology, safety, and healthcare.

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