Economic Inequality
Early in the twentieth century, the share of total national income drawn by the top 1% of US earners hovered around 18%. That share hit an all-time high in 1928 — when top earners took home 21%, including capital gains. The top 1% of earners took home less than 10% of all income through the 1960s and 1970s, 15% in 1996, and 20% in 2006.
Americans at the 95th income percentile or higher can expect to live nine years longer than those at the 10th percentile or lower.
The US ranks 21st among the 30 nations in the OECD in terms of life expectancy, and 25th in terms of infant mortality.
The Gini coefficient measures income distribution on a scale from zero (where income is perfectly equally distributed among all members of a society) to one (where a single person possesses all the income). For the US, the Gini coefficient has risen from .35 in 1965 to .44 today. On the per-capita GDP scale, our neighbors are Sweden, Switzerland, and the U.K.; on the Gini scale, our neighbors include Sri Lanka, Mali, and Russia.
In 1965, the average salary for a CEO of a major US company was 25 times the salary of the average worker. Today, the average CEO’s pay is more than 250 times the average worker’s. The current top marginal tax rate — 35% — is far lower than the 91% tax levied on top earners from 1951 to 1963.
Societies with higher inequality tend to have higher crime rates, although it’s not clear which way the causal arrow runs, or if it exists.
When a society is starkly divided along racial or ethnic lines, the affluent are less likely to take care of the poor, Edward L. Glaeser and Alberto Alesina have found. Internationally, welfare systems are least generous in countries that are the most ethnically heterogeneous. Those US states with the largest black populations have the least generous welfare systems. And in a nationwide study of people’s preferences for redistribution, Erzo F.P. Luttmer found that people who lived near poor people of the same race were likely to support redistribution, and people who lived near poor people of a different race were less likely to do so (see “Group Loyalty and the Taste for Redistribution”; pdf file here).
“Unequal America,” by Elizabeth Gudrais