Change in distribution of income gains in the USA since WWII

Posted: July 2007

Two charts tell the story of changes in income distribution in the U.S. in two periods since 1947. Between 1947 and 1979, when the U.S. economy was based on goods and services production and consumption, income gains were evenly distributed among income groups, averaging from 7.17% to 9.83% annually across all groups. As the U.S. economy became dominated by finance starting in the early 1980s, average annual income gains remained close to 7% for the top 1 percent group, but fell to 0.24% for the lowest fifth.

Income Distribution

Income Distribution

After 2004, distribution of real income gains became even more extreme: negative for 90% of wage earners and up as much as 16% for the top 0.6%.

Research in 2003 by Rafael Gomez of the London School of Economics and David K. Foot of the Univiersity of Toronto is consistent with most research on the economic impact of wealth inequality: persistent inequality leads to slower economic growth.

Slow Growth

As recession approaches in late 2007, a poorer median voter is going to tend to vote for candidates that offer relief.


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