Chartbook of Social Inequality

In the mid-1970s, the long post-War decline in economic inequality in the U.S. came to an end and inequality began to rise. The four decades since that time have shown a gradual, but steady upward trend in inequality, with no obvious signs of abating. Although the causes of this rise have been much debated and well examined, fundamental questions about the social and economic consequences of this long, slow rise in inequality are only beginning to receive the attention they deserve. Will the increasing divergence between the lives of the rich and the poor erode our sense of common purpose as a nation, and fray the social fabric of American life? Will high and rising inequality undermine the American institutions that we count on to approximate the American ideal of equal opportunity and give everyone a chance at the American dream?

While inequality was rising between 1975 and 2010, the level of real income for most of the population has been stagnant or at best grown slowly. To some extent, this lack of income growth has been masked by national statistics showing that average national household income grew 33% between 1975 and 2010, increasing from $50,800 to $67,500. But literally all of this growth was due to the explosion of incomes of the well off, which pulled up the mean. The real income of the median American household grew only 14% over the same period, from $43,500 to $49,500 – a dispiriting growth rate of only .37% per year over 35 years.

What is the underlying reason that the mean and median incomes diverged? The answer is that the distribution of these income gains over this 35-year period has been extremely unequal. It is now clear that the rise in inequality has largely been driven by increased concentration of income and wealth at the top of the income distribution. Real average income for the bottom 20% of all income earners grew 2.9%, from $10,800 to $11,000,while that of the top 20% grew 53%, increasing from $111,000 to $170,000. And, as has been extensively documented in careful analysis of income tax records, the growth in the top 20% of the income distribution is predominantly accounted for by growth in the very top percentiles. The top 5% have seen their mean income rise 104%, from $168,000 in 1975 to nearly $342,000 by 2008. And the top 1% saw their income rise 184%, from $318,000 to $906,000.

This inequity is even starker when one considers the changes in the percentage share of total income. Between 1975 and 2010, only members of the top 20% of income earners saw their share of total national income increase, rising from 43% to slightly above 50%. The share of national income obtained by the other 80% of the population actually decreased, with the bottom 20% experiencing its share of aggregate national income decline from a meager 4.3% to an even paltrier 3.3%.

These trends describe a disturbing reality for a broad cross-section of Americans who are beginning to lose faith in the American dream. The rising tide that once lifted all boats now appears to lift only a few. And it seems that a permanent low tide is slowly engulfing greater and greater proportions of the US population, stranding them in an increasingly unenviable position.

In the following charts and tables, we document the rise in economic inequality, and present some of the larger social and economic trends that illustrate the growing disparities between the lives of the rich and the poor. In each section, we have assembled a broad set of indicators of social and economic trends that reflect powerful and consequential divisions within the U.S. population. The information presented in these tables and figures is drawn from a multitude of sources, many of which are supported by Russell Sage Foundation awards, and published by the Foundation’s press. Some of the information is drawn from government sources, some from published articles and books, and some is based directly on in-house calculations of publicly available data by Russell Sage Foundation staff.


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