Income inequality has been growing in the U.S. for decades. One way to look at it, to see how non-normal the distribution of income has become, is to consider a basic concept in statistics. Given the mean (average value) and the median (middle point) in all your data, a ‘normal’ distribution associated with a bell curve would see mean equal median. The greater the difference between these, the more things are slanted one way or the other.
Using Census Bureau median and mean income data, you can see how close those two points once were and how different they’ve become. For example, here is the difference between median and mean household incomes over time across all races:
In 1970, mean income was 14.5% larger than median income. The Census Bureau shows nine different buckets: under $15,000, $15,000 to $24,999, $25,000 to $34,999, $50,000 to $74,999, $75,000 to $99,999, $100,000 to $149,999, and $200,000 or more. In that $50,000 to $74,999 category sat 23.5% of the households. Directly below was 14.5% of households, and 14.9% right above. The lowest income category showed heavy weighting with 12.4% of households, while the highest category had 1.7%.
By 2021, though, things changed radically. The middle bucket of $50,000 to $74,900 still had the largest percentage of households, but only 16.2%. Many households had moved beyond, particularly upward. Now there were 11.6% in the $200,000 or more. Mean household income was 44.5% higher than median, so a larger portion of people had seen their incomes grow rapidly, but the great middle of American society was left behind.
There was data available for different racial categories, although not over the entire span of time as the government didn’t appear to collect data on them until later. Here’s the graph:
Some immediate observations are that white households saw a 42% difference, Hispanics were at 39.5%, and Asians at 37%. Blacks had a 46.8% increase of average over middle and Native American and Alaskan, 43.1%.
Also, back in 1970, the percentage difference between mean and median for blacks was 26.3% and lopsided toward lower incomes, with 17.3% in the $50,000 to $74,999 category, 22.7% under $15,000, and only 0.3% in $200,000 and above. In 2021, 17.0% of black households were in the $50,000 to $74,999 range, 15.9% under $15,000, and 5.7% in $200,000 and above.
Data for American Indians and Alaskan natives didn’t start until 1987. In 2021, 17.9% were in the $50,000 to $74,999 range, 14.8% under $15,000, and 5.9% at $200,000 or more.
Hispanics had 23.7% between $50,000 and $74,999 in 1972 (first appearance), 10.8% under $15,000, and 0.8% over $200,000. In 2021, 18.4% were in the middle group, 11.2% under $15,000, and 6.6% over $200,000.
Asian is an outlier from the start because the data collection only began in 2002, whereas with all the other racial groups the largest percentage of households (14.8%) made $50,000 to $74,999, 7.9% were under $15,000, and, unlike most other groups, 11.1% made $200,000 or more. By 2021, 7.8% were under $15,000 but 21.1% made more than $200,000.
The shift upwards in all groups is notable, as are the different percentages in the highest category. But another odd thing is how, over decades, the big middle has remained $50,000 to $74,999, even as inflation over the years has reduced the value of that money, so people in households can less easily afford even the basics in life.
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