Under Construction

This page currently concentrates on difference between the rich and poor in the US. There are many other types of income disparity, e.g. gender and race differences, developing and developed countries, regional differences, ...

Family Income:

Source: Income Concentration and Top Income Tax Rates, Emmanuel Saez, UC Berkeley, 2014

Share of national income claimed by top 10%

An article "Technology and Inequality" in the Nov-Dec, 2014 MIT Technology Review says, "The disparity between the rich and everyone else is larger than ever in the United States and increasing in much of Europe. Why?:" It asks if technology is the cause. The answer is technology may have something to do with with it, but there are other problems.

1. Executives make ridiculous salaries with no link between pay and performance.
2. Elimination of middle class jobs thru automation
3. People in well to do families still have a better chance of getting a good education.
4. In Europe inherited wealth grows faster than earned wealth.

The disparity between wages with a post-grad degree and less education is widening. The article says that better education is very important in narrowing the gap.

They reference Robert Solow, nobel laureate economics professor at MIT who wrote a review "Thomas Piketty is Right", of Piketty's 2013 best seller "Capital in the Twenty-First Century" for the New Republic. He agrees with Piketty that a more progressive tax might work in Europe, but it will never pass here.

A central point of Piketty's book (a 700 page tome) is the simple statement r > g, where r is the average return on capital and g is the economic growth rate. When the rate of return on capital exceeds the growth rate (which he says is what happened until the beginning of the 20th century and is likely to happen again as growth slows), then the money that rich people make from their wealth piles up while wages rise more slowly if at all.

Since the 1950s, economics has been dominated by the idea--notably formulated by Simon Kuznets, a Harvard economist and Nobel laureate--that inequality diminishes as countries become more technologically developed and more people are able to take advantage of the resulting opportunities. Many of us suppose that our talents, skills, training, and acumen will allow us to prosper; it is what economists like to call "human capital." But the belief that technological progress will lead to "the triumph of human capital over financial capital and real estate, capable managers over fat cat stockholders, and skill over nepotism" is, writes Piketty, "largely illusory."

Source: New York Times article "Two Candidates, Two Fortunes, Two Distinct Views of Wealth" (Romney and Edwards), Dec. 23, 2007

The top one percent of households received 21.8 percent of all pre-tax income in 2005, more than double what that figure was in the 1970s.

In 1979, the average income of the top 5 percent of families was 11.4 times as large as the average income of the bottom 20 percent. In 2005, the ratio was 20.9 times. (EPI, State of Working America 2006-07.
Source: By the Numbers inequality.org

Salary spread:
The ratio of the compensation of CEOs to the average worker in 1974 was 35 to 1; in 1995 it was 150 to 1.

Wealth (assets):
The inequality in wealth is even greater than that of income.

In March 2006 Forbes reported 793 billionaires in the US with combined net worth of $2.6 trillion. In March 2007 Forbes reported 946 billionaires in the US with combined net worth of $3.5 trillion. That is a 1-year increase of 19% in the number of billionaires and an increase of $35% in their net worth during a time of increasing poverty. Severe poverty is at its highest point in three decades.

(732) 662- Household distribution of net worth (1998), i.e. total value of assets:
Percent of owners Net worth Cumulative Percent Cumulative net worth
Top 0.5% 25.6% Top 0.5% 25.6%
Next 0.5% 8.4% Top 1% 34.0%
Next 4% 23.4% Top 5% 57.4%
Next 5% 11.4% Top 10% 68.8%
Next 10% 12.8% Top 20% 81.6%
Last 80% 18.5% All 100% 100%
Source: LCurve.org

The size of the 2014 bonus pool paid to securities industries employees in New York City was $28.5 billion. Dividing this total among 167,800 workers yields an average bonus of $172,860.
$28 billion is roughly double the total earnings of all Americans who work full time at the federal minimum wage. 1.03 million full-time workers paid an hourly wage of $7.25 or less.
See All You Need to Know About Income Inequality, in One Comparison - NYTimes.com

25% of families who rent their homes spend more than 50% of their income on rent.

"The Great Divide: Unequal Societies and What We Can Do About Them," Joseph Stiglitz, the Nobel Prize-winning economist, includes two chapters whose titles sum it up: "Inequality Is Not Inevitable" and "Inequality Is a Choice."
  Excerpt - The Diane Rehm Show

"Inequality: What Can Be Done?" by Anthony B. Atkinson, a British economist, in which he lays out 15 steps to reduce inequality. A few of his recommendations:

  • Government should be more concerned with monopolies and competition policy. should be capped at 65 or 75 times the average pay in the firm.
  • Personal income taxes should be made more progressive, with a maximum rate of 65 percent.
  • Every child should get a "child benefit" payment, to help keep kids out of poverty.

"Capital in the Twenty-First Century",Thomas Piketty

Income Disparity at Wikipedia
Income Concentration and Top Income Tax Rates, Emmanuel Saez, UC Berkeley, 2014
"Technology and Inequality" | MIT Technology Review
The Wealthiest Americans Ever | NY Times
Education and income
By the Numbers inequality.org
Income Gap Is Widening, Data Shows, NY TImes, March 29, 2007
"Two Americas: One Rich, One Poor? Understanding Income Inequality in the U.S.", The Heritage Foundation , August 24, 2004
'Inequality Is a Choice' - NYTimes.com

Return to Etiquette

last updated 2 May 2015