How Unequal Are We?
· Percentage of U.S. total income in 1976 that went to the top 1% of American households: 8.9.
· Percentage in 2007: 23.5.
· Only other year since 1913 that the top 1 percent’s share was that high: 1928.
· Combined net worth of the Forbes 400 wealthiest Americans in 2007: $1.5 trillion.
· Combined net worth of the poorest 50% of American households: $1.6 trillion.
· U.S. minimum wage, per hour: $7.25.
· Hourly pay of Chesapeake Energy CEO Aubrey McClendon, for an 80-hour week: $27,034.74.
· Average hourly wage in 1972, adjusted for inflation: $20.06.
· In 2008: $18.52.
Median household income in 2008 was $50,303, according to Census data. Half of American households had income greater than this figure, half had less.
Between the end of World War II and the late 1970s, incomes in the United States were becoming more equal. In other words, incomes at the bottom were rising faster than those at the top. Since the late 1970s, this trend has reversed.
For example, data from tax returns show that the top 1% of households received 8.9% of all pre-tax income in 1976. In 2007, the top 1% share had more than doubled to 23.5%.
There is reason to suspect that this level of income inequality is dangerous to our economy. The only other year since 1913 that the wealthy claimed such a large share of national income was 1928, when the top 1% share was 23.9%. The following year, the stock market crashed, which led to the Great Depression. After peaking again in 2007, the U.S. stock market crashed in 2008, leading to what some are now calling the “Great Recession.”
Between 1979 and 2008, the top 5% of American families saw their real incomes increase 73%, according to Census data. Over the same period, the lowest-income fifth saw a decrease in real income of 4.1%.
In 1980, the average income of the top 5% of families was 10.9 times as large as the average income of the bottom 20 percent, according to Census data. In 2008, the ratio was 20.6 times.
The current recession has hit incomes hard across the board. Median household income declined 3.6% in 2008, the largest single-year decline on record. Adjusting for inflation, incomes reached their lowest point since 1997. (Center on Budget and Policy Priorities analysis of Census data)