Income inequality has been getting lots of attention lately, and one of the main topics of debate is whether income inequality in the United States has been increasing over time. And if income inequality is increasing, has it been accelerating in recent years, or even “exploding” as Jonathan Chait claimed? The Census Bureau has an extensive historical database of statistics on household income and income inequality, and the graphs below were prepared using Census data (Tables E-1 and F-4) to chart the trends in income dispersion over time to help answer those questions.
The graphs display three different measures of income dispersion from 1967 to 2010: the share of total U.S. income going to the highest-income quintile (top 20 percent) of American households, and Gini coefficients (a statistical measure of dispersion that is one way to quantify income inequality) for both U.S. households and families. As can be seen in the top chart, all three measures of income dispersion have gradually increased over time, but most of the increases occurred in the earlier period between 1967 and 1994. Starting in the mid-1990s, the three measures of income inequality stalled out and barely changed in the 16 years from 1994 to 2010 (see bottom chart of just the 1994-2010 period).
When income inequality stabilized around 1994, the share of total U.S. income going to the highest-income quintile was 49.1 percent, and 16 years later in 2010 that income share was essentially unchanged at 50.2 percent. Likewise, over that period the Gini coefficients increased only slightly, from 45.6 percent to 46.9 percent for U.S. households, and from 42.6 percent to 44 percent for families. The trends displayed in the two charts are completely contrary to the common narrative that the 1960s, 1970s, and 1980s were decades of much greater income equality than in recent years, when supposedly the incomes of “the rich” skyrocketed and income inequality “exploded.”
Bottom Line: According to three different Census Bureau measures, income inequality in America increased only gradually from the 1960s through the mid-1990s, but since then has remained relatively constant. Therefore, the factual record of income data in the United States certainly doesn’t support the claims that income inequality has “exploded” recently. A more accurate description of income inequality over the last several decades would be to say that it “flat-lined” starting in about 1994.