Income inequality in the United States
|Income in the United States|
Income inequality in the United States has grown significantly since the early 1970s, after several decades of stability, and has been the subject of study of many scholars and institutions. The U.S. consistently exhibits higher rates of income inequality than most developed nations due to the nation's enhanced support of free market capitalism.
The top 1% of income earners received approximately 23% of the pre-tax income in 2012, versus approximately 10% from 1950 to 1980. A 2011 study by the CBO found that the top earning 1 percent of households increased their income by about 275% after federal taxes and income transfers over a period between 1979 and 2007, compared to a gain of just under 40% for the 60 percent in the middle of America's income distribution. Most of the growth in income inequality has been between the middle class and top earners, with the disparity widening the further one goes up in the income distribution.
To put this change into perspective, at 1979 inequality levels, each family in the bottom 80% of the income distribution would be receiving approximately $7,000 per year more in income on average, or nearly $600 per month. Half of the U.S. population lives in poverty or is low-income, according to U.S. Census data.
Americans are not generally aware of the extent of inequality or recent trends. There is a direct relationship between actual income inequality and the public’s views about the need to address the issue in most developed countries, but not in the U.S., where income inequality is worse but the concern is lower. The U.S. was ranked the 41st worst among 141 countries (30th percentile) on income equality measured by the Gini index.
There is significant and ongoing debate as to the causes, economic effects, and solutions regarding income inequality. While before-tax income inequality is subject to market factors (e.g., 
Labor (workers) and capital (owners) have always battled over the share of the economic pie each obtains. The influence of the labor movement has waned in the U.S. since the 1960s along with union participation and more pro-capital laws. The share of total worker compensation has declined from 58% of national income (GDP) in 1970 to nearly 53% in 2013, contributing to income inequality. This has led to concerns that the economy has shifted too far in favor of capital, via a form of corporatism, corpocracy or neoliberalism.
Although some have spoken out in favor of moderate inequality as a form of incentive, others have warned against the current high levels of inequality, including Yale Nobel prize for economics winner Robert J. Shiller, (who called rising economic inequality "the most important problem that we are facing now today"), former Federal Reserve Board chairman Alan Greenspan, ("This is not the type of thing which a democratic society – a capitalist democratic society – can really accept without addressing"), and President Barack Obama (who referred to the widening income gap as the "defining challenge of our time").
- Post-1970 increase 1.1
- Effects of 2007-2009 recession 1.2
- 2009-present 1.3
- Causes 2
Effects: Economic 3
- Overview 3.1
Economic growth 3.2
- Views that income inequality slows economic growth 3.2.1
- Views that income inequality does not slow growth 3.2.2
- Likelihood of financial crises 3.3
- Monopolization of labor, consolidation, and competition 3.4
- Aggregate demand and debt 3.5
Effects: Socio-economic mobility 4
- Overview 4.1
- Over lifetimes 4.2
- Between generations 4.3
- Poverty 4.4
Effects on democracy and society 5
- Political polarization 5.1
- Class system 5.2
- Political change 5.3
- Charitable giving 5.4
- Health 5.5
- Financing of social programs 5.6
- Education and human capital 5.7
- Public attitudes 6
States and cities 7
- Comparisons by state 7.1
International comparisons 8
- Overall 8.1
- Reasons for relative performance 8.2
- Canada 8.3
Policy responses 9
- Overview 9.1
- Resources available to children 9.2
- Affordable higher education 9.3
- Public spending and welfare state spending 9.4
- Taxes on the wealthy 9.5
- Corporate tax reform 9.6
- Minimum wages 9.7
- Maximum wage implementation 9.8
- Subsidies and income guarantees 9.9
- Rent-seeking limits 9.10
- Economic democracy 9.11
- Commentary on post-1970's increase 10.1
Measurement approaches 11
- Overview 11.1
- Internal Revenue Service (IRS) data 11.2
- Census Bureau data 11.3
- Income measures: Pre-and post-tax 11.4
- Demographic issues 11.5
- Gini index 11.6
- Measuring inequality through consumption vs. income 11.7
See also 12
- Wealth inequality 12.1
- See also 13
- References 14
- Further reading 15
- External links 16
The level of concentration of income in America has fluctuated throughout its history. Going back to the early 20th Century, when income statistics started to become available, there has been a "great economic arc" from high inequality "to relative equality and back again," in the words of Nobel laureate economist Paul Krugman. In 1915, an era in which the Rockefellers and Carnegies dominated American industry, the richest 1% of Americans earned roughly 18% of all income. By 2007, the top 1 percent account for 24% of all income. In between, their share fell below 10% for three decades.
The first era of inequality lasted roughly from the post-civil war era ("the Gilded Age") to sometime around 1937. But from about 1937 to 1947 – a period that has been dubbed the "Great Compression" – income inequality in America fell dramatically. Highly progressive New Deal taxation, the strengthening of unions, and regulation of the National War Labor Board during World War II raised the income of the poor and working class and lowered that of top earners. This "middle class society" of relatively low level of inequality remained fairly steady for about three decades ending in early 1970s, the product of relatively high wages for the US working class and political support for income leveling government policies.
Wages remained relatively high because of lack of foreign competition for American manufacturing, lack of low skilled immigrant workers, competition for US workers in general, and – arguably most important – strong trade unions. By 1947 more than a third of non-farm workers were union members, and unions both raised average wages for their membership, and indirectly and to a lesser extent, raised wages for workers in similar occupations not represented by unions. Scholars believe political support for equalizing government policies was provided by high voter turnout from union voting drives, the support of the otherwise conservative South for the New Deal, and prestige that the massive mobilization and victory of World War II had given the government.
The return to high inequality – or what Krugman and journalist Timothy Noah have referred as the "Great Divergence" – began in the 1970s. Studies have found income grew more unequal almost continuously except during the economic recessions in 1990–91, 2001 (Dot-com bubble), and 2007 sub-prime bust.
The Great Divergence differs in some ways from the pre-Depression era inequality. Before 1937 a larger share of top earners income came from capital (interest, dividends, income from rent, capital gains). Post 1970, income of high-income taxpayers comes predominantly from "labor", i.e. employment compensation.
Until 2011, the Great Divergence had not been a major political issue in America, though stagnation of middle class income was. In 2009 the Barack Obama administration White House Middle Class Working Families Task Force convened to focus on economic issues specifically affecting middle-income Americans. In 2011, the Occupy movement drew considerable attention to income inequality in the country.
CBO reported that for the 1979-2007 period, after-tax income of households in the top 1 percent of earners grew by 275%, compared to 65% for the next 19 percent, just under 40% for the next 60 percent, 18% for the bottom fifth of households. "As a result of that uneven income growth," the report noted, "the share of total after-tax income received by the 1 percent of the population in households with the highest income more than doubled between 1979 and 2007, whereas the share received by low- and middle-income households declined … The share of income received by the top 1 percent grew from about 8% in 1979 to over 17% in 2007. The share received by the other 19 percent of households in the highest income quintile (one-fifth of the population as divided by income) was fairly flat over the same period, edging up from 35% to 36%." 
According to CBO, the major reason for observed rise in unequal distribution of after-tax income was an increase in market income, that is household income before taxes and transfers. Market income for a household is a combination of labor income (such as cash wages, employer-paid benefits, employer-paid payroll taxes), business income (such as income from businesses and farms operated solely by their owners), capital gains (profits realized from the sale of assets, stock options), capital income (such as interest from deposits, dividends, rental income), and other income. Of these, capital gains accounted for 80% of the increase in market income for the households in top 20%, in the 2000–2007 period. Even over 1991–2000 period, according to CBO, capital gains accounted for 45% of the market income for the top 20% households.
Effects of 2007-2009 recession
Just as higher income groups are more likely to enjoy financial gains when economic times are good, they are also likely to suffer more significant income losses during economic downturns and recessions when compared to lower income groups. This is because higher income groups tend to derive relatively more of their income from more volatile sources related to capital income (i.e., business income, capital gains and dividends), as opposed to labor income (wages and salaries). For example, during 2011 the top 1% of income earners derived 37% of their income from labor income, versus 62% for the middle quintile. On the other hand, the top 1% derived 58% of their income from capital as opposed to 4% for the middle quintile. Government transfers represented only 1% of the income of the top 1%, but 25% for the middle quintile; the dollar amounts of these transfers tend to rise in recessions.
This effect occurred during the Great Recession of 2007–2009, when total income going to the bottom 99 percent of Americans declined by 11.6%, but fell by 36.3% for the top 1%. Declines were especially steep for capital gains, which fell by 75% in real (inflation-adjusted) terms between 2007 and 2009. Other sources of capital income also fell: interest income by 40% and dividend income by 33%. Wages, the largest source of income, fell by a more modest 6%.
The share of pre-tax income received by the top 1% fell from 18.7% in 2007 to 16.0% in 2008 and 13.4% in 2009, while the bottom four quintiles all had their share of pre-tax income increase from 2007-2009. The share of after-tax income received by the top 1% income group fell from 16.7% in 2007 to 11.5% in 2009.
However, the distribution of household incomes has become more unequal during the post-2008 economic recovery as the effects of the recession reversed. CBO reported in November 2014 that the share of pre-tax income received by the top 1% had risen from 13.3% in 2009 to 14.6% in 2011. During 2012 alone, incomes of the wealthiest 1 percent rose nearly 20%, whereas the income of the remaining 99 percent rose 1% in comparison.
According to an article in The New Yorker, by 2012, the share of pre-tax income received by the top 1% had returned to its pre-crisis peak, at around 23% of the pre-tax income. This is based on widely-cited data from economist Emmanuel Saez, which uses "market income" and relies primarily on IRS data. The CBO uses both IRS data and Census data in its computations and reports a lower pre-tax figure for the top 1%. The two series were approximately 5 percentage points apart in 2011 (Saez at about 19.7% versus CBO at 14.6%), which would imply a CBO figure of about 18% in 2012 if that relationship holds, a significant increase versus the 14.6% CBO reported for 2011. The share of after-tax income received by the top 1% rose from 11.5% in 2009 to 12.6% in 2011.
Inflation-adjusted pre-tax income for the bottom 90% of American families fell between 2010 and 2013, with the middle income groups dropping the most, about 6% for the 40th-60th percentiles and 7% for the 20th-40th percentiles. Incomes in the top decile rose 2%.
The top 1% captured an estimated 95% of the income growth during the 2009-2012 recovery period, with their pre-tax incomes growing 31.4% adjusted for inflation while the pre-tax incomes of the bottom 99% grew 0.4%. By 2012, the top 10% (top decile) had a 50.4% share of the pre-tax income, the highest level since 1917.
According to the CBO and others, "the precise reasons for the [recent] rapid growth in income at the top are not well understood", but "in all likelihood," an "interaction of multiple factors" was involved. "Researchers have offered several potential rationales." Some of these rationales conflict, some overlap. They include:
- the globalization hypothesis – low skilled American workers have been losing ground in the face of competition from low-wage workers in Asia and other "emerging" economies;
- skill-biased technological change – the rapid pace of progress in information technology has increased the demand for the highly skilled and educated so that income distribution favored brains rather than brawn;
- the superstar hypothesis – modern technologies of communication often turn competition into a tournament in which the winner is richly rewarded, while the runners-up get far less than in the past;
- immigration of less-educated workers – relatively high levels of immigration of low skilled workers since 1965 may have reduced wages for American-born high school dropouts;
policy and politics – capital account liberalization, soaring executive compensation, stock buybacks, stagnating middle income pay and more regressive taxation resulting from political decisions, not market forces. Decision such as not intervening to stop executive capture of corporate boards, the crushing of labor unions, etc. or changes in the governance and structure of executive compensation, and the failure of government policy makers to do anything about rising inequality.
- This includes less progressive taxation since 1970, particularly the reduction in the top marginal income tax rates from 91% to less than 40%; and taxes on capital gains at lower rates than income taxes;
- a decline in unionization of the workforce, leaving workers with less bargaining power in the labor market; and
- austerity, or cuts in public spending during adverse economic conditions, which can reduce wages of public employees, and reduce financial aid to the unemployed and underemployed
Analyzing the top three hypotheses, Paul Krugman found them to be "increasingly inadequate" as more evidence accumulated:
- "Globalization can explain part of the relative decline in blue-collar wages, but it can't explain the 2,500 percent rise in C.E.O. incomes. Technology may explain why the salary premium associated with a college education has risen, but it's hard to match up with the huge increase in inequality among the college-educated, with little progress for many but gigantic gains at the top. The superstar theory works for Jay Leno, but not for the thousands of people who have become awesomely rich without going on TV."
The CBO analyzes changes in income inequality using the Gini index, a measure which rises as income inequality increases. CBO reported in 2011 that: "Between 1979 and 2007, the Gini index for market income increased by 23 percent, the index for market income after transfers increased by 29 percent, and the index for income measured after transfers and federal taxes increased by 33 percent." CBO further analyzed the components of the 33 percent increase as follows:
- 23% from changes in distribution of "market income" to households (top earners received a larger share of salaries, interest, dividends, capital gains, business income, etc.)
- 6% from changes in "government transfers" (social security, unemployment, the end of AFDC welfare, etc.)
- 4% from changes in federal taxation (overall decline in the average federal tax rate and shift in federal revenues from income taxes to less progressive payroll taxes, etc.)
Of the 23% increase in inequality from changes in pre-tax "market income", 79% came from a shift to top earners in different types of income across the board. A smaller amount (21%) came from a shift from wages and salaries to more concentrated income sources – i.e., interest, dividends, business income, and especially capital gains, which are greater among top earners than income from salaries and wages, which is more common to those with lower incomes.
Income inequality can have a variety of economic effects. Alan B. Krueger, President Obama's Chairman of the Council of Economic Advisors, summarized the conclusions of several research studies in a 2012 speech. In general, as income inequality worsens:
- More income shifts to the wealthy, who tend to spend less of each marginal dollar, causing consumption and therefore economic growth to slow;
- Income mobility falls, meaning the parents' income is more likely to predict their children's income;
- Middle and lower-income families borrow more money to maintain their consumption, a contributing factor to financial crises; and
- The wealthy gain more political power, which results in policies that further slow economic growth.
Among economists and related experts, most agree that America's growing income inequality is "deeply worrying", unjust, a danger to democracy/social stability, or a sign of national decline. Yale professor Robert Shiller, who was among three Americans who won the Nobel prize for economics in 2013, said after receiving the award, "The most important problem that we are facing now today, I think, is rising inequality in the United States and elsewhere in the world." Economist Thomas Piketty, who has spent nearly 20 years studying inequality primarily in the US, warns that “The egalitarian pioneer ideal has faded into oblivion, and the New World may be on the verge of becoming the Old Europe of the twenty-first century’s globalized economy.”
On the other side of the issue are those who have claimed that the increase is not significant, that it doesn't matter because America's economic growth and/or equality of opportunity are what's important, that it is a global phenomenon which would be foolish to try to change through US domestic policy, that it "has many economic benefits and is the result of ... a well-functioning economy", and has or may become an excuse for "class-warfare rhetoric", and may lead to policies that "reduce the well-being of wealthier individuals". 
Views that income inequality slows economic growth
Economist Alan B. Krueger wrote in 2012: "The rise in inequality in the United States over the last three decades has reached the point that inequality in incomes is causing an unhealthy division in opportunities, and is a threat to our economic growth. Restoring a greater degree of fairness to the U.S. job market would be good for businesses, good for the economy, and good for the country." Krueger wrote that the significant shift in the share of income accruing to the top 1% over the 1979 to 2007 period represented nearly $1.1 trillion in annual income. Since the wealthy tend to save nearly 50% of their marginal income while the remainder of the population saves roughly 10%, other things equal this would reduce annual consumption (the largest component of GDP) by as much as 5%. Krueger wrote that borrowing likely helped many households make up for this shift, which became more difficult in the wake of the 2007-2009 recession.
Inequality in land and income ownership is negatively correlated with subsequent economic growth. A strong demand for redistribution will occur in societies where a large section of the population does not have access to the productive resources of the economy. Rational voters must internalize such issues. High unemployment rates have a significant negative effect when interacting with increases in inequality. Increasing inequality harms growth in countries with high levels of urbanization. High and persistent unemployment also has a negative effect on subsequent long-run economic growth. Unemployment may seriously harm growth because it is a waste of resources, because it generates redistributive pressures and distortions, because it depreciates existing human capital and deters its accumulation, because it drives people to poverty, because it results in liquidity constraints that limit labor mobility, and because it erodes individual self-esteem and promotes social dislocation, unrest and conflict. Policies to control unemployment and reduce its inequality-associated effects can strengthen long-run growth.
Concern extends even to such supporters (or former supporters) of laissez-faire economics and private sector financiers. Former Federal Reserve Board chairman Alan Greenspan, has stated reference to growing inequality: "This is not the type of thing which a democratic society – a capitalist democratic society – can really accept without addressing." Some economists (David Moss, Paul Krugman, Raghuram Rajan) believe the "Great Divergence" may be connected to the financial crisis of 2008. Money manager William H. Gross, managing director of PIMCO, criticized the shift in distribution of income from labor to capital that underlies some of the growth in inequality as unsustainable, saying:
Even conservatives must acknowledge that return on capital investment, and the liquid stocks and bonds that mimic it, are ultimately dependent on returns to labor in the form of jobs and real wage gains. If Main Street is unemployed and undercompensated, capital can only travel so far down Prosperity Road.
He concluded: "Investors/policymakers of the world wake up – you’re killing the proletariat goose that lays your golden eggs."
Among economists and reports that find inequality harming economic growth are a December 2013 Associated Press survey of three dozen economists', a 2014 report by Standard and Poor's, economists Gar Alperovitz, Robert Reich, Joseph Stiglitz, and Branko Milanovic.
A December 2013 Associated Press survey of three dozen economists found that the majority believe that widening income disparity is harming the US economy. They argue that wealthy Americans are receiving higher pay, but they spend less per dollar earned than middle class consumers, the majority of the population, whose incomes have largely stagnated.
A 2014 report by Standard and Poor's concluded that diverging income inequality has slowed the economic recovery and could contribute to boom-and-bust cycles in the future as more and more Americans take on debt in order to consume. Higher levels of income inequality increase political pressures, discouraging trade, investment, hiring, and social mobility according to the report.
Joseph Stiglitz argues that concentration of wealth and income leads the politically powerful economic elite seek to protect themselves from redistributive policies by weakening the state, and this leads to less public investments by the state – roads, technology, education, etc. – that are essential for economic growth.
According to economist Branko Milanovic, while traditionally economists thought inequality was good for growth, "The view that income inequality harms growth – or that improved equality can help sustain growth – has become more widely held in recent years. The main reason for this shift is the increasing importance of human capital in development. When physical capital mattered most, savings and investments were key. Then it was important to have a large contingent of rich people who could save a greater proportion of their income than the poor and invest it in physical capital. But now that human capital is scarcer than machines, widespread education has become the secret to growth." He continued that "Broadly accessible education" is both difficult to achieve when income distribution is uneven and tends to reduce "income gaps between skilled and unskilled labor."
Views that income inequality does not slow growth
In response to the Occupy movement Richard A. Epstein defended inequality in a free market society, maintaining that "taxing the top one percent even more means less wealth and fewer jobs for the rest of us." According to Epstein, "the inequalities in wealth ... pay for themselves by the vast increases in wealth", while "forced transfers of wealth through taxation ... will destroy the pools of wealth that are needed to generate new ventures. Some researchers have found a connection between lowering high marginal tax rates on high income earners (high marginal tax rates on high income being a common measure to fight ineuality), and higher rates of employment growth.
Economic sociologist Lane Kenworthy has found no correlation between levels of inequality and economic growth among developed countries, among states of the US, or in the US over the years from 1947 to 2005. Jared Bernstein found a nuanced relation he summed up as follows: "In sum, I’d consider the question of the extent to which higher inequality lowers growth to be an open one, worthy of much deeper research". Tim Worstall commented that capitalism would not seem to contribute to an inherited-wealth stagnation and consolidation, but instead appears to promotes the opposite, a vigorous, ongoing turnover and creation of new wealth.
Likelihood of financial crises
Income inequality was cited as one of the causes of the Great Depression by Supreme Court Justice Louis D. Brandeis in 1933. In his dissent in the Louis K. Liggett Co. v. Lee (288 U.S. 517) case, he wrote: "Other writers have shown that, coincident with the growth of these giant corporations, there has occurred a marked concentration of individual wealth; and that the resulting disparity in incomes is a major cause of the existing depression."
Central Banking economist Raghuram Rajan argues that "systematic economic inequalities, within the United States and around the world, have created deep financial 'fault lines' that have made [financial] crises more likely to happen than in the past" – the Financial crisis of 2007–08 being the most recent example. To compensate for stagnating and declining purchasing power, political pressure has developed to extend easier credit to the lower and middle income earners – particularly to buy homes – and easier credit in general to keep unemployment rates low. This has given the American economy a tendency to go "from bubble to bubble" fueled by unsustainable monetary stimulation.
Monopolization of labor, consolidation, and competition
Greater income inequality can lead to monopolization of the labor force, resulting in fewer employers requiring fewer workers. Remaining employers can consolidate and take advantage of the relative lack of competition, leading to less consumer choice, market abuses, and relatively higher prices.
Aggregate demand and debt
Income inequality lowers aggregate demand, leading to increasingly large segments of formerly middle class consumers unable to afford as many luxury and essential goods and services. This pushes production and overall employment down.
Deep debt may lead to bankruptcy and researchers Elizabeth Warren and Amelia Warren Tyagi found a fivefold increase in the number of families filing for bankruptcy between 1980 and 2005. The bankruptcies came not from increased spending "on luxuries", but from an "increased spending on housing, largely driven by competition to get into good school districts." Intensifying inequality may mean a dwindling number of ever more expensive school districts that compel middle class – or would-be middle class – to "buy houses they can't really afford, taking on more mortgage debt than they can safely handle".
Effects: Socio-economic mobility
The ability to move from one income group into another (income mobility) is a means of measuring economic opportunity. A higher probability of upward income mobility theoretically would help mitigate higher income inequality, as each generation has a better chance of achieving higher income groups. Conservatives and libertarians such as economist Thomas Sowell, and Congressman Paul Ryan (R., Wisc.) argue that more important than the level of equality of results is America's equality of opportunity, especially relative to other developed countries such as western Europe.
However, several studies have indicated that higher income inequality corresponds with lower income mobility. In other words, income brackets tend to be increasingly "sticky" as income inequality increases. This is described by a concept called the Great Gatsby curve. In the words of journalist Timothy Noah, "you can't really experience ever-growing income inequality without experiencing a decline in Horatio Alger-style upward mobility because (to use a frequently-employed metaphor) it's harder to climb a ladder when the rungs are farther apart."
The centrist Brookings Institution said in March 2013 that income inequality was increasing and becoming permanent, sharply reducing social mobility in the US. A 2007 study (by Kopczuk, Saez and Song in 2007) found the top population in America "very stable" and that income mobility had "not mitigated the dramatic increase in annual earnings concentration since the 1970s."
Economist Paul Krugman, attacks conservatives for resorting to "extraordinary series of attempts at statistical distortion". He argues that while in any given year, some of the people with low incomes will be "workers on temporary layoff, small businessmen taking writeoffs, farmers hit by bad weather" – the rise in their income in succeeding years is not the same 'mobility' as poor people rising to middle class or middle income rising to wealth. It's the mobility of "the guy who works in the college bookstore and has a real job by his early thirties."
Studies by the Urban Institute and the US Treasury have both found that about half of the families who start in either the top or the bottom quintile of the income distribution are still there after a decade, and that only 3 to 6% rise from bottom to top or fall from top to bottom.On the issue of whether most Americans do not stay put in any one income bracket, Krugman quotes from 2011 CBO distribution of income study
Household income measured over a multi-year period is more equally distributed than income measured over one year, although only modestly so. Given the fairly substantial movement of households across income groups over time, it might seem that income measured over a number of years should be significantly more equally distributed than income measured over one year. However, much of the movement of households involves changes in income that are large enough to push households into different income groups but not large enough to greatly affect the overall distribution of income. Multi-year income measures also show the same pattern of increasing inequality over time as is observed in annual measures.
In other words, "many people who have incomes greater than $1 million one year fall out of the category the next year – but that’s typically because their income fell from, say, $1.05 million to 0.95 million, not because they went back to being middle class."
Several studies have found the ability of children from poor or middle-class families to rise to upper income – known as "upward relative intergenerational mobility" – is lower in the US than in other developed countries – and at least two economists have found lower mobility linked to income inequality.
In their Great Gatsby curve, White House Council of Economic Advisers Chairman Alan B. Krueger and labor economist Miles Corak show a negative correlation between inequality and social mobility. The curve plotted "intergenerational income elasticity" – i.e. the likelihood that someone will inherit their parents' relative position of income level – and inequality for a number of countries.
Aside from the proverbial distant rungs, the connection between income inequality and low mobility can be explained by the lack of access for un-affluent children to better (more expensive) schools and preparation for schools crucial to finding high-paying jobs; the lack of health care that may lead to obesity and diabetes and limit education and employment.
Krueger estimates that "the persistence in the advantages and disadvantages of income passed from parents to the children" will "rise by about a quarter for the next generation as a result of the rise in inequality that the U.S. has seen in the last 25 years."
Greater income inequality can increase the poverty rate, as more income shifts away from lower income brackets to upper income brackets. Jared Bernstein wrote: "If less of the economy's market-generated growth – i.e., before taxes and transfers kick in – ends up in the lower reaches of the income scale, either there will be more poverty for any given level of GDP growth, or there will have to be a lot more transfers to offset inequality's poverty-inducing impact." The Economic Policy Institute estimated that greater income inequality would have added 5.5% to the poverty rate between 1979 and 2007, other factors equal. Income inequality was the largest driver of the change in the poverty rate, with economic growth, family structure, education and race other important factors. An estimated 16% of Americans lived in poverty in 2012, versus 26% in 1967.
Effects on democracy and society
Economists Jared Bernstein and Paul Krugman have attacked the concentration of income as variously "unsustainable" and "incompatible" with real democracy. American political scientists Jacob S. Hacker and Paul Pierson quote a warning by Greek-Roman historian Plutarch: "An imbalance between rich and poor is the oldest and most fatal ailment of all republics." Some academic researchers have written that the US political system risks drifting towards a form of oligarchy, through the influence of corporations, the wealthy, and other special interest groups.
Rising income inequality has been linked to the political polarization in Washington DC. According to a 2013 study published in the Political Research Quarterly, elected officials tend to be more responsive to the upper income bracket and ignore lower income groups.
Paul Krugman wrote in November 2014 that: "The basic story of political polarization over the past few decades is that, as a wealthy minority has pulled away economically from the rest of the country, it has pulled one major party along with it...Any policy that benefits lower- and middle-income Americans at the expense of the elite — like health reform, which guarantees insurance to all and pays for that guarantee in part with taxes on higher incomes — will face bitter Republican opposition." He used environmental protection as another example, which was not a partisan issue in the 1990s but has since become one.
As income inequality has increased, the degree of House of Representatives polarization measured by voting record has also increased. Professors McCarty, Pool and Rosenthal wrote in 2007 that polarization and income inequality fell in tandem from 1913 to 1957 and rose together dramatically from 1977 on. They show that Republicans have moved politically to the right, away from redistributive policies that would reduce income inequality. Polarization thus creates a feedback loop, worsening inequality.
Historically, discussions of income inequality and capital vs. labor debates have sometimes included the language of class warfare, from President Teddy Roosevelt (referring to the leaders of big corporations as "malefactors of great wealth"), to President Franklin Roosevelt ("economic royalists...are unanimous in their hate for me--and I welcome their hatred"), to more recent history around the "1% versus the 99%" and which political party better represents the interests of the middle class.
Investor Warren Buffett said in 2006 that: "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” He advocated much higher taxes on the wealthiest Americans, who pay lower effective tax rates than many middle-class persons.
Two journalists concerned about social separation in the US are economist Robert Frank, who notes that: "Today's rich had formed their own virtual country .. [T]hey had built a self-contained world unto themselves, complete with their own health-care system (concierge doctors), travel network (Net jets, destination clubs), separate economy...The rich weren't just getting richer; they were becoming financial foreigners, creating their own country within a country, their own society within a society, and their economy within an economy.
Political changeLoss of income by the middle class relative to the top-earning 1% and 0.1% is both a cause and effect of political change, according to journalist Hedrick Smith. In the decade starting around 2000, business groups employed 30 times as many Washington lobbyists as trade unions and 16 times as many lobbyists as labor, consumer, and public interest lobbyists combined.
From 1998 through 2010 business interests and trade groups spent $28.6 billion on lobbying compared with $492 million for labor, nearly a 60-to-1 business advantage.
The result, according to Smith, is a political landscape dominated in the 1990s and 2000s by business groups, specifically "political insiders" – former members of Congress and government officials with an inside track – working for "Wall Street banks, the oil, defense, and pharmaceutical industries; and business trade associations." In the decade or so prior to the Great Divergence, middle-class-dominated reformist grassroots efforts – such as civil rights movement, environmental movement, consumer movement, labor movement – had considerable political impact.
Economist Joseph Stiglitz argues that hyper-inequality may explain political questions – such as why America's infrastructure (and other public investments) are deteriorating, or the country's recent relative lack of reluctance to engage in military conflicts such as the 2003 invasion of Iraq. Top-earning families, wealthy enough to buy their own education, medical care, personal security, and parks, have little interest in helping pay for such things for the rest of society, and the political influence to make sure they don't have to. So too, the lack of personal or family sacrifice involved for top earners in the military intervention of their country – their children being few and far between in the relatively low-paying all-volunteer military – may mean more willingness by influential wealthy to see its government wage war.
Concentration of resources in a smaller segment of the population may affect charitable giving. Contrary to the image of the wealthy being great benefactors of charity, researchers have found higher-income groups donate less not more to charity than lower income. In 2011, the top 20 percent income group donated 1.3% of their income, the bottom 20 percent, 3.2%. Donations among the economic elite were more likely to go to elite colleges, universities, museums and arts organizations; and less likely to go to social-service organizations, such as the United Way, Salvation Army, or Feeding America.
The relatively high rates of health and social problems (obesity, mental illness, homicides, teenage births, Incarceration, child conflict, drug use) and lower rates of social goods (life expectancy, educational performance, trust among strangers, women's status, social mobility, even numbers of patents issued per capita), in the US compared to other developed countries may be related to its high income inequality. Using statistics from 23 developed countries and the 50 states of the US, British researchers Richard G. Wilkinson and Kate Pickett have found such a correlation which remains after accounting for ethnicity, national culture, and occupational classes or education levels. Their findings, based on UN Human Development Reports and other sources, locate the United States at the top of the list in regards to inequality and various social and health problems among developed countries. The authors argue inequality creates psychosocial stress and status anxiety that lead to social ills. A 2009 study conducted by researchers at Harvard University and published in the British Medical Journal attribute one in three deaths in the United States to high levels of inequality. According to The Earth Institute, life satisfaction in the US has been declining over the last several decades, which has been attributed to soaring inequality, lack of social trust and loss of faith in government.
Paul Krugman argues that the much lamented long-term funding problems of Social Security and Medicare can be blamed in part on the growth in inequality as well as the usual culprits like longer life expectancies. The traditional source of funding for these social welfare programs – payroll taxes – is inadequate because it does not capture income from capital, and income above the payroll tax cap, which make up a larger and larger share of national income as inequality increases.
Upward redistribution of income is responsible for about 43% of the projected Social Security shortfall over the next 75 years.
Education and human capital
Disagreeing with this focus on the top-earning 1%, and urging attention to the economic and social pathologies of lower-income/lower education Americans, is conservative journalist David Brooks. Whereas in the 1970s, high school and college graduates had "very similar family structures", today, high school grads are much less likely to get married and be active in their communities, and much more likely to smoke, be obese, get divorced, or have "a child out of wedlock."
The zooming wealth of the top one percent is a problem, but it’s not nearly as big a problem as the tens of millions of Americans who have dropped out of high school or college. It’s not nearly as big a problem as the 40 percent of children who are born out of wedlock. It’s not nearly as big a problem as the nation’s stagnant human capital, its stagnant social mobility and the disorganized social fabric for the bottom 50 percent.
Contradicting most of these arguments, classical liberals such as Friedrich Hayek have maintained that because individuals are diverse and different, state intervention to redistribute income is inevitably arbitrary and incompatible with the concept of general rules of law, and that "what is called 'social' or distributive' justice is indeed meaningless within a spontaneous order". Those who would use the state to redistribute, "take freedom for granted and ignore the preconditions necessary for its survival." 
The growth of inequality has provoked a political protest movement – the Occupy movement – starting in Wall Street and spreading to 600 communities across the United States in 2011. Its main political slogan – "We are the 99%" – references its dissatisfaction with the concentration of income in the top 1%.
A December 2011 Gallup poll found a decline in the number of Americans who felt reducing the gap in income and wealth between the rich and the poor was extremely or very important (21 percent of Republicans, 43 percent of independents, and 72 percent of Democrats). In 2012, several surveys of voters attitudes toward growing income inequality found the issue ranked less important than other economic issues such as growth and equality of opportunity, and relatively low in affecting voters "personally".  In 1998 a Gallup poll had found 52% of Americans agreeing that the gap between rich and the poor was a problem that needed to be fixed, while 45% regarded it as "an acceptable part of the economic system". In 2011, those numbers are reversed: Only 45% see the gap as in need of fixing, while 52% do not. However, there was a large difference between Democrats and Republicans, with 71% of Democrats calling for a fix.
In contrast, a January 2014 poll found 61% of Republicans, 68% of Democrats and 67% of independents accept the notion that income inequality in the US has been growing over the last decade. The Pew Center poll also indicated that 69% of Americans supported the government doing "a lot" or "some" to address income inequality and that 73% of Americans supported raising the minimum wage from $7.25 to $10.10 per hour.
Opinion surveys of what respondents thought was the right level of inequality have found Americans no more accepting of income inequality than other citizens of other nations, but more accepting of what they thought the level of inequality was in their country, being under the impression that there was less inequality than there actually was. Dan Ariely and Michael Norton show in a study (2011) that US citizens across the political spectrum significantly underestimate the current US wealth inequality and would prefer a more egalitarian distribution of wealth. Joseph Stiglitz in "The Price of Inequality" has argued that this sense of unfairness has led to distrust in government and business.
States and cities
Income inequality (as measured by the Gini coefficient) is not uniform among the states: after-tax income inequality in 2009 was greatest in Texas and lowest in Maine. Income inequality has grown from 2005 to 2012 in more than 2 out of 3 metropolitan areas.
Comparisons by state
The household income Gini index for the United States was 0.468 in 2009, according to the US Census Bureau, though it varied significantly between states. The states of Utah, Alaska and Wyoming have a pre-tax income inequality Gini coefficient that is 10% lower than the average, while Washington D.C. and Puerto Rico 10% higher. After including the effects of federal and state taxes, the U.S. Federal Reserve estimates 34 states in the USA have a Gini coefficient between 0.30 and 0.35, with the state of Maine the lowest. At the county and municipality levels, the pre-tax Gini index ranged from 0.21 to 0.65 in 2010 across the United States, according to Census Bureau estimates.
The U.S. was ranked the 41st worst among 141 countries (30th percentile) on income equality measured by the Gini index. The UN, CIA World Factbook, and OECD have used the Gini index to compare inequality between countries, and as of 2006, the United States had one of the highest levels of income inequality among similar developed or high income countries, as measured by the index. While inequality has increased since 1981 in two-thirds of OECD countries most developed countries are in the lower, more equal, end of the spectrum, with a Gini coefficient in the high twenties to mid thirties.
The gini rating (after taxes and government income transfers) of the United States is sufficiently high, however, to put it among less developed countries. The US ranks above (more unequal than) South American countries such Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Nicaragua, and Venezuela, according to the CIA.
Reasons for relative performance
One 2013 study indicated that U.S. income inequality is comparable to other developed countries before taxes and transfers, but rated last (worst) among 22 developed countries after taxes and transfers. This means that public policy choices, rather than market factors, drive U.S. income inequality disparities relative to comparable wealthy nations.
Some have argued that inequality is higher in other countries than official statistics indicate because of unreported income. European countries have higher amounts of wealth in offshore holdings.
According to The New York Times, Canadian middle class incomes are now higher than those in the United States as of 2014, and some European nations are closing the gap as their citizens have been receiving higher raises than their American counterparts. Bloomberg reported in August 2014 that only the wealthy saw pay increases since the 2008 recession, while average American workers saw no boost in their paychecks.
Economists have proposed a variety of solutions for addressing income inequality. For example, Federal Reserve Chair Janet Yellen described four "building blocks" that could help address income and wealth inequality in an October 2014 speech. These included expanding resources available to children, affordable higher education, business ownership, and inheritance. While before-tax income inequality is subject to market factors, after-tax income inequality can be directly affected by tax and transfer policy. U.S. income inequality is comparable to other developed nations before taxes and transfers, but is among the worst after taxes and transfers. This suggests that more progressive tax and transfer policies would be required to align the U.S. with other developed nations. The Center for American Progress recommended a series of steps in September 2014, including tax reform, subsidizing and reducing healthcare and higher education costs, and strengthening labor influence.
However, there is debate regarding whether a public policy response is appropriate for income inequality. For example, Federal Reserve Economist Thomas Garrett wrote in 2010: "It is important to understand that income inequality is a byproduct of a well-functioning capitalist economy. Individuals’ earnings are directly related to their productivity...A wary eye should be cast on policies that aim to shrink the income distribution by redistributing income from the more productive to the less productive simply for the sake of 'fairness.'"
Public policy responses addressing causes and effects of income inequality include: progressive tax incidence adjustments, strengthening social safety net provisions such as Aid to Families with Dependent Children, welfare, the food stamp program, Social Security, Medicare, and Medicaid, increasing and reforming higher education subsidies, increasing infrastructure spending, and placing limits on and taxing rent-seeking.
Resources available to children
Research shows that children from lower-income households who get good-quality pre-Kindergarten education are more likely to graduate from high school, attend college, hold a job and have higher earnings. In 2010, the U.S. ranked 28th out of 38 advanced countries in the share of four-year-olds enrolled in public or private early childhood education. Gains in enrollment stalled after 2010, as did growth in funding, due to budget cuts arising from the Great Recession. Per-pupil spending in state-funded programs declined by 12% after inflation since 2010. The U.S. differs from other countries in that it funds public education primarily through sub-national (state and local) taxes. The quality of funding for public education varies based on the tax base of the school system, with significant variation in local taxes and spending per pupil. Better teachers also raise the educational attainment and future earnings of students, but they tend to migrate to higher income school districts.
Affordable higher education
Median annual earnings of full-time workers with a four-year bachelor's degree is 79% higher than the median for those with only a high school diploma. The wage premium for a graduate degree is considerably higher than the undergraduate degree. College costs have risen much faster than income, resulting in an increase in student loan debt from $260 billion in 2004 to $1.1 trillion in 2014. From 1995 to 2013, outstanding education debt grew from 26% of average yearly income to 58%, for households with net worth below the 50th percentile. The unemployment rate is also considerably lower for those with higher educational attainment. A college education is nearly free in many European countries, often funded by higher taxes.
Public spending and welfare state spending
The OECD asserts that public spending is vital in reducing the ever expanding wealth gap. Lane Kenworthy advocates incremental reforms to the U.S. welfare state in the direction of the Nordic social democratic model, thereby increasing economic security and equal opportunity. Currently, the U.S. has the weakest social safety net of all developed nations.
Welfare spending may entice the poor away from finding remunerative work and toward dependency on the state. Eliminating social safety nets can discourage free market entrepreneurs by increasing the risk of business failure from a temporary setback to financial ruin.
Taxes on the wealthy
CBO reported that less progressive tax and transfer policies contributed to an increase in after-tax income inequality between 1979 and 2007. This indicates that more progressive income tax policies (e.g., higher income taxes on the wealthy and a higher earned-income tax credit) would reduce after-tax income inequality.
Recent policies enacted under President Obama increase taxes on the wealthy, including the American Taxpayer Relief Act of 2012 and the Affordable Care Act. As reported by The New York Times in January 2014, these laws include several tax increases on individuals earning over $400,000 and couples earning over $450,000:
- Raised the top marginal tax rate to 39.6% from 35%;
- Raised the rate on dividends and capital gains by 5 percentage points, to 20 percent; and
- Two new surcharges — a 3.8% tax on investment income and a 0.9% tax on regular income.
These changes are estimated to add $600 billion to revenue over 10 years, while leaving the tax burden on everyone else mostly as it was. This reverses a long-term trend of lower tax rates for upper income persons.
The CBO estimated that the average tax rate for the top 1% rose from 28.1% in 2008 to 33.6% in 2013, reducing after-tax income inequality relative to a baseline without those policies.
The economists Emmanuel Saez and Thomas Piketty recommend much higher top marginal tax rates on the wealthy, up to 50 percent, or 70 percent or even 90 percent. Ralph Nader, Jeffrey Sachs, the United Front Against Austerity, among others, call for a financial transactions tax (also known as the Robin Hood tax) to bolster the social safety net and the public sector.
During 2012, investor Warren Buffett advocated higher minimum effective income tax rates on the wealthy, considering all forms of income: "I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that." This would eliminate special treatment for capital gains and carried interest, which are taxed at lower rates and comprise a relatively larger share of income for the wealthy. He argued that in 1992, the tax paid by the 400 highest incomes in the United States averaged 26.4% of adjusted gross income. In 2009, the rate was 19.9%.
Corporate tax reform
Economist Dean Baker argues that the existence of tax loopholes, deductions, and credits for the corporate income tax contributes to rising income inequality by permitting large corporations with many accountants to reduce their tax burden and by permitting large accounting firms to receive payments from smaller businesses in exchange for helping these businesses reduce their tax burden. He says that this redistributes large sums of money that would otherwise be taxed to individuals who are already wealthy yet contribute nothing to society in order to obtain this wealth. He further argues that since a large portion of corporate income is reinvested in the business, taxing corporate income amounts to a tax on reinvestment, which he says should be left untaxed. He concludes that eliminating the corporate income tax, while needing to be offset by revenue increases elsewhere, would reduce income inequality.
In his 2013 State of the Union address, Barack Obama proposed raising the federal minimum wage. The progressive economic think tank the Economic Policy Institute agrees with this position, stating: "Raising the minimum wage would help reverse the ongoing erosion of wages that has contributed significantly to growing income inequality." In response to the fast-food worker strikes of 2013, Labor Secretary Thomas Perez said that it was another sign of the need to raise the minimum wage for all workers: "It's important to hear that voice... For all too many people working minimum wage jobs, the rungs on the ladder of opportunity are feeling further and further apart."
The Economist wrote in December 2013: "A minimum wage, providing it is not set too high, could thus boost pay with no ill effects on jobs....America's federal minimum wage, at 38% of median income, is one of the rich world's lowest. Some studies find no harm to employment from federal of state minimum wages, others see a small one, but none finds any serious damage."
The U.S. minimum wage was last raised to $7.25 per hour in July 2009. As of December 2013, there were 21 states with minimum wages above the Federal minimum, with the State of Washington the highest at $9.32. Ten states index their minimum wage to inflation.
The  Also in January 2014, six hundred economists sent the President and Congress a letter urging for a minimum wage hike to $10.10 an hour by 2016.
In February 2014, the CBO reported the effects of a minimum wage increase under two scenarios, an increase to $10.10 with indexing for inflation thereafter and an increase to $9.00 with no indexing:
- Income inequality would be improved under both scenarios. Families with income more than 6 times the poverty threshold would see their incomes fall (due in part to their business profits declining with higher employee costs), while families with incomes below that threshold would rise.
- Employment would likely fall by 500,000 under the $10.10 option and 100,000 under the $9.00 option, with a wide range of possible outcomes.
- Approximately 16.5 million workers would have their wages rise under the $10.10 option versus 7.5 million under the $9.00 option.
- The number of persons below the poverty income threshold would fall by 900,000 under the $10.10 option versus 300,000 under the $9.00 option.
Maximum wage implementation
Amalgamated Transit Union international president Lawrence J. Hanley has called for a maximum wage law, which "would limit the amount of compensation an employer could receive to a specified multiple of the wage earned by his or her lowest paid employees." CEO pay at the largest 350 U.S. companies was 20 times the average worker pay in 1965; 58 times in 1989 and 273 times in 2012.
Subsidies and income guarantees
Others argue for a Basic income guarantee, ranging from civil rights leader Martin Luther King, Jr. to libertarians such as Milton Friedman (in the form of negative income tax), Robert Anton Wilson, Gary Johnson (In the form of the fair tax "prebate") and Charles Murray to the Green Party.
General limitations on and taxation of rent-seeking is popular with large segments of both Republicans and Democrats.
The economists Richard D. Wolff and Gar Alperovitz claim that greater economic equality could be achieved by extending democracy into the economic sphere. In an essay for Harper's Magazine, investigative journalist Erik Reece argues that "With the political right entrenched in its opposition to unions, worker-owned cooperatives represent a less divisive yet more radical model for returning wealth to the workers who earned it."
Commentary on post-1970's increase
Lisa Shalett, chief investment officer at Merrill Lynch Wealth Management noted that, "for the last two decades and especially in the current period, ... productivity soared ... [but] U.S. real average hourly earnings are essentially flat to down, with today's inflation-adjusted wage equating to about the same level as that attained by workers in 1970. ... So where have the benefits of technology-driven productivity cycle gone? Almost exclusively to corporations and their very top executives."
Economist Timothy Smeeding summed up the current trend:
Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be ... the majority of large gains are indeed at the top of the distribution.
...from 1973 to 2005, real hourly wages of those in the 90th percentile – where most people have college or advanced degrees – rose by 30% or more... among this top 10 percent, the growth was heavily concentrated at the very tip of the top, that is, the top 1 percent. This includes the people who earn the very highest salaries in the U.S. economy, like sports and entertainment stars, investment bankers and venture capitalists, corporate attorneys, and CEOs. In contrast, at the 50th percentile and below – where many people have at most a high school diploma – real wages rose by only 5 to 10% – 
Various methods are used to determine income inequality and different sources may give different figures for gini coefficients or ratio different ratio of percentiles, etc.. The United States Census Bureau studies on inequality of household income and individual income show lower levels of inequality than some other sources (Saez and Piketty, and the CBO), but do not include data for the highest-income households where most of change in income distribution has occurred.
Two commonly cited sources of income inequality data are the CBO and economist Emmanuel Saez, which differ somewhat in their sources and methods. According to Saez, for 2011 the share of "market income less transfers" received by the top 1% was about 19.5%. Saez used IRS data in this measure. The CBO uses both IRS data and Census data in its computations and reported a lower "pre-tax" figure for the top 1% of 14.6%. The two data series were approximately 5 percentage points apart in recent years.
Internal Revenue Service (IRS) data
Pioneers in the use of IRS income data to analyze income distribution are Emmanuel Saez and Thomas Piketty at the Paris School of Economics showed that the share of income held by the top 1 percent was as large in 2005 as in 1928. Other sources that have noted the increased inequality included economist Janet Yellen who stated, "the growth [in real income] was heavily concentrated at the very tip of the top, that is, the top 1 percent." Follow-up research, published in 2014, by Emmanuel Saez and Gabriel Zucman revealed that more than half of those in the top 1 percent had not experienced relative gains in wealth between 1960 and 2012. In fact, those between the top 1 percent and top .5 percent had actually lost relative wealth. Only those in the top .1 percent and above had made relative wealth gains during that time.
Census Bureau data
The comparative use of Census Bureau data, as well as most sources of demographic income data, has been questioned by statisticians for being unable to account for 'mobility of incomes'. At any given time, the Census Bureau ranks all households by household income and then divides this distribution of households into quintiles. The highest-ranked household in each quintile provides the upper income limit for each quintile. Comparing changes in these upper income limits for different quintiles is how changes are measured between one moment in time and the next. The problem with inferring income inequality on this basis is that the census statistics provide only a snapshot of income distribution in the U.S., at individual points in time. The statistics do not reflect the reality that income for many households changes over time—i.e., incomes are mobile. For most people, income increases over time as they move from their first, low-paying job in high school to a better-paying job later in their lives. Also, some people lose income over time because of business-cycle contractions, demotions, career changes, retirement, etc. The implication of changing individual incomes is that individual households do not remain in the same income quintiles over time. Thus, comparing different income quintiles over time is like comparing apples to oranges, because it means comparing incomes of different people at different stages in their earnings profile.
Gary Burtless of the Brookings Institution notes that many economists and analysts who use U.S. census data fail to recognize recent and significant lower- and middle-income gains, primarily because census data does not capture key information: "A commonly used indicator of middle class income is the Census Bureau’s estimate of median household money income. The main problem with this income measure is that it only reflects households’ before-tax cash incomes. It fails to account for changing tax burdens and the impact of income sources that do not take the form of cash. This means, for example, that tax cuts in 2001-2003 and 2008-2012 are missed in the census statistics. Furthermore, the Census Bureau measure ignores income received as in-kind benefits and health insurance coverage from employers and the government. By ignoring such benefits as well as sizeable tax cuts in the recession, the Census Bureau’s money income measure seriously overstated the income losses that middle-income families suffered in the recession.
New CBO income statistics are beginning to show the growing importance of these items. In 1980, in-kind benefits and employer and government spending on health insurance accounted for just 6% of the after-tax incomes of households in the middle one-fifth of the distribution. By 2010 these in-kind income sources represented 17% of middle class households’ after-tax income. The income items missed by the Census Bureau are increasing faster than the income items included in its money income measure. What many observers miss, however, is the success of the nation’s tax and transfer systems in protecting low- and middle-income Americans against the full effects of a depressed economy. As a result of these programs, the spendable incomes of poor and middle-class families have been better insulated against recession-driven losses than the incomes of Americans in the top 1%. As the CBO statistics demonstrate, incomes in the middle and at the bottom of the distribution have fared better since 2000 than incomes at the very top."
Income measures: Pre-and post-tax
Inequality can be measured before and after the effects of taxes and transfer payments such as social security and unemployment insurance.
- Market income, or income before taxes & transfers: Expertise, productiveness and work experience, inheritance, gender, and race have had a strong influence on distribution of personal income in the United States as in other countries.
- After taxes & transfers: Reducing the progressivity of the income tax system and transfers increases income inequality. CBO reported in 2011 that: "The equalizing effect of transfers declined over the 1979–2007 period primarily because the distribution of transfers became less progressive. The equalizing effect of federal taxes also declined over the period, in part because the amount of federal taxes shrank as a share of market income and in part because of changes in the progressivity of the federal tax system."
Comparisons of income over time should adjust for changes in average age, family size, number of breadwinners, and other characteristics of a population. Measuring personal income ignores dependent children, but household income also has problems – a household of ten has a lower standard of living than one of two people, though the income of the two households may be the same. People’s earnings tend to rise over their working lifetimes, so “snapshot measures of income inequality can be misleading.” The inequality of a recent college graduate and a 55-year-old at the peak of his/her career is not an issue if the graduate has the same career path.
Conservative researchers and organizations have focused on the flaws of household income as a measure for standard of living in order to refute claims that income inequality is growing, becoming excessive or posing a problem for society. According to sociologist Dennis Gilbert, growing inequality can be explained in part by growing participation of women in the workforce. High earning households are more likely to be dual earner households, And according to a 2004 analysis of income quintile data by the Heritage Foundation, inequality becomes less when household income is adjusted for size of household. Aggregate share of income held by the upper quintile (the top earning 20 percent) decreases by 20.3% when figures are adjusted to reflect household size.
However the Pew Research Center found household income has appeared to decline less than individual income in the twenty-first century because those who are no longer able to afford their own housing have increasingly been moving in with relatives, creating larger households with more income earners in them. The 2011 CBO study "Trends in the Distribution of Household Income" mentioned in this article adjusts for household size so that its quintiles contain an equal number of people, not an equal number of households. Looking at the issue of how frequently workers or households move into higher or lower quintiles as their income rises or falls over the years, the CBO found income distribution over a multi-year period "modestly" more equal than annual income. The CBO study confirms earlier studies.
Overall, according to Timothy Noah, correcting for demographic factors (today’s population is older than it was 33 years ago, and divorce and single parenthood have made households smaller), you find that income inequality, though less extreme than shown by the standard measure, is also growing faster than shown by the standard measure.
The Gini coefficient summarizes income inequality in a single number and is one of the most commonly used measures of income inequality. It uses a scale from 0 to 1 – the higher the number the more inequality. 0 represents perfect equality (everyone having exactly the same income), and 1 represents perfect inequality (one person having all income). (Index scores are commonly multiplied by 100 to make them easier to understand.) Gini index ratings can be used to compare inequality within (by race, gender, employment) and between countries, before and after taxes. Different sources will often give different gini values for the same country or population measured. For example, the Census Bureau's official Gini coefficient for the United States was 46.9 in 2010, up from the all-time low of 38.6 in 1968. By contrast, the OECD's Gini coefficient for income inequality in the United States is 37 (including wages and other cash transfers), which is still the highest in the developed world, with the lowest being Denmark (24.3), Norway (25.6), and Sweden (25.9).
Measuring inequality through consumption vs. income
Conservative researchers have argued that income inequality is not significant because consumption, rather than income should be the measure of inequality, and inequality of consumption is less extreme than inequality of income in the US. Will Wilkinson of the libertarian Cato Institute states that "the weight of the evidence shows that the run-up in consumption inequality has been considerably less dramatic than the rise in income inequality," and consumption is more important than income. According to Johnson, Smeeding, and Tory, consumption inequality was actually lower in 2001 than it was in 1986. The debate is summarized in "The Hidden Prosperity of the Poor" by journalist Thomas B. Edsall. Other studies have not found consumption inequality less dramatic than household income inequality, and the CBO's study found consumption data not "adequately" capturing "consumption by high-income households" as it does their income, though it did agree that household consumption numbers show more equal distribution than household income.
Others dispute the importance of consumption over income, pointing out that if middle and lower income are consuming more than they earn it is because they are saving less or going deeper into debt. A "growing body of work" suggests that income inequality has been the driving factor in the growing household debt, as high earners bid up the price of real estate and middle income earners go deeper into debt trying to maintain what once was a middle class lifestyle. Between 1983 and 2007, the top 5 percent saw their debt fall from 80 cents for every dollar of income to 65 cents, while the bottom 95 percent saw their debt rise from 60 cents for every dollar of income to $1.40. Economist Krugman has found a strong correlation between inequality and household debt in America over the last hundred years.
Related to income inequality is the topic of wealth inequality, which refers to the distribution of net worth (i.e., what is owned minus what is owed) as opposed to annual income. Net worth is primarily affected by movements in the prices of assets, such as stocks, bonds, and real estate, as opposed to wage and salary income. Wealth is also highly concentrated, with wealth increases concentrated at the very top of the wealth distribution, in the top 0.1 percent. For example, the top 400 Americans had net worth of $2 trillion in 2013, which was more than the combined net worth of the bottom 50% of U.S. households. The average net worth of these 400 Americans was $5 billion.
Emmanuel Saez and Gabriel Zucman of the University of California, Berkeley published research in 2014, "The Distribution of US Wealth, Capital Income and Returns since 1913," asserting that since 1960, relative wealth growth has only occurred in within the top 0.1 percent of Americans. Furthermore, their analysis also shows that since 1960, those between the top 1 percent and top 0.5 percent have actually lost a significant share of wealth. To be more precise, more than half of the "Top 1 Percent" have lost wealth over the past fifty years.
Nevertheless, in terms of the nation's wealth rather than income, the top 1 percent still possess approximately 40 percent. The top 5% wealthiest households had approximately 72% of the financial assets in 2010. The bottom 80% of households had 5% of the financial assets and 11% of the net worth.
The Center for American Progress reported in September 2014 that: "The trends in rising inequality are also striking when measured by wealth. Among the top 20 percent of families by net worth, average wealth increased by 120 percent between 1983 and 2010, while the middle 20 percent of families only saw their wealth increase by 13 percent, and the bottom fifth of families, on average, saw debt exceed assets—in other words, negative net worth...Homeowners in the bottom quintile of wealth lost an astounding 94 percent of their wealth between 2007 and 2010."
- American Dream
- Economic inequality
- Economic mobility
- Economy of the United States
- Educational attainment in the United States
- High-net-worth individual
- Homelessness in the United States
- Inequality for All – 2013 documentary film presented by Robert Reich
- Income inequality metrics
- Legatum Prosperity Index
- List of countries by income equality
- List of countries by inequality-adjusted HDI
- Median income per household member
- Racial inequality in the United States
- Racism in the United States
- Second Bill of Rights
- Socio-economic mobility in the United States
- The Divide: American Injustice in the Age of the Wealth Gap – book
- The Spirit Level: Why More Equal Societies Almost Always Do Better – book
- Social justice
- Tax policy and economic inequality in the United States
- "US Census Bureau. (2001). Historical Income Tables – Income Equality.". Archived from the original on February 8, 2007. Retrieved June 20, 2007.
- ."US Census Bureau"Weinberg, D. H. (June 1996). A Brief Look At Postwar U.S. Income Inequality. (PDF). Retrieved June 20, 2007.
- ."The Brookings Institute"Burtless, G. (January 11, 200). Has U.S. Income Inequality Really Increased?. . Retrieved June 20, 2007.
- "The New York Times"Johnston, D. (March 29, 2007). Income Gap Is Widening, Data Shows. . March 29, 2007. Retrieved June 20, 2007.
- "Shaprio, E. (October 17, 2005). New IRS Data Show Income Inequality Is Again of The Rise. Center on Budget and Policy Priorities". Retrieved June 20, 2007.
- Rugaber, Christopher S.; Boak, Josh (January 27, 2014). "Wealth gap: A guide to what it is, why it matters".
- Piketty, Thomas (2014). Capital in the Twenty-First Century. Belknap Press. ISBN 067443000X "The Explosion of US Inequality after 1980": pp. 294–96.
- Weeks, J. (2007). Inequality Trends in Some Developed OECD countries. In J. K. S. & J. Baudot (Ed.), Flat World, Big Gaps (159–174). New York: ZED Books (published in association with the United Nations).
- Income distribution and poverty – OECD. OECD
"Can Domestic Policy Affect Income Distribution?" by Timothy Noah, The New Republic (March 13, 2012)
- "Among the industrial democracies where income inequality is increasing, it's much worse in the United States than it is almost anywhere else. Among 34 nations recently surveyed by the OECD, the United States got beat only by Turkey, Mexico, and Chile. That's as measured by the Gini coefficient, and including taxes and government transfer payments." Note: inequality is higher in less economically developed countries such as Turkey, Mexico, Chile, which are also members of the OECD
- Maxwell Strachan (May 1, 2014). The U.S. Is Even More Unequal Than You Realized. The Huffington Post. Retrieved May 1, 2014.
- Richard Wolff (October 26, 2011). How the 1% got richer, while the 99% got poorer. The Guardian. Retrieved October 6, 2014
- New Yorker-John Cassidy-Income Inequality in Six Charts-November 2013
- Wiseman, Paul (September 10, 2013). "Richest 1 percent earn biggest share since '20s".
- "More Bad News For The Middle Class," by Timothy Noah, The New Republic (September 12, 2012)
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011.
- "The United States of Inequality Entry 8: The Stinking Rich and the Great Divergence," by Timothy Noah, Slate.com (September 14, 2010)
- Lawrence Summers-Harness Market Forces to Share Prosperity-June 24, 2007
- Yen, Hope (December 15, 2011). "U.S. Poverty: Census Finds Nearly Half Of Americans Are Poor Or Low-Income".
- Stiglitz, J.E. (June 14, 2012) "We’ve been brainwashed" Salon
- Pew Research-U.S. high income gap met with relatively lower concern-December 2013
- CIA World Factbook-Income Equality Comparison on Gini Index-Retrieved November 2014
- Steven Rattner (November 2014). "Inequality, Unbelievably, Gets Worse". The New York Times.
- Vox-Goodheart and Erfurth-Monetary policy and long-term trends-November 2014
- NYT-Joseph Stiglitz-Inequality is holding back the recovery-January 2013
- Federal Reserve Economic Database-National Income, Selected Data Series-Retrieved November 9, 2014
- Capitalism vs Corporatism - Edmund Phelps Columbia University. January 11, 2010).
- Corporatism, Not Capitalism Is To Blame For Inequality - Edmund Phelps Financial Times. July 24, 2014).
Gérard Duménil and Dominique Lévy (2004). Capital Resurgent: Roots of the Neoliberal Revolution. Harvard University Press. ISBN 0674011589
- "The advent of economic neoliberalism in the 1980s triggered a shift in the world economy. In the three decades following World War II, now considered a golden age of capitalism, economic growth was high and income inequality decreasing. But in the mid-1970s this social compact was broken as the world economy entered the stagflation crisis, following a decline in the profitability of capital. This crisis opened a new phase of stagnating growth and wages, and unemployment. Interest rates as well as dividend flows rose, and income inequality widened."
- Jonathan Hopkin, Victor Lapuente and Lovisa Moller (January 25, 2014). Lower levels of inequality are linked with greater innovation in economies. London School of Economics. Retrieved July 17, 2014.
- John Christoffersen (October 15, 2013).Robert Shiller: Income Inequality Is 'Most Important Problem'. The Huffington Post. Retrieved October 16, 2013.
- "White House: Here's Why You Have To Care About Inequality," by Timothy Noah, The New Republic (January 13, 2012)
- Obama says income inequality is defining challenge for U.S. PBS NewsHour. December 4, 2013. Retrieved December 26, 2013).
- "Saez, E. (October, 2007). Table A1: Top fractiles income shares (excluding capital gains) in the U.S., 1913–2005.". Retrieved January 17, 2008.
- Krugman, Paul (2007). The Conscience of a Liberal. New York: W. W. Norton. p.5
- Noah, Timothy. "The United States of Inequality". Slate. Retrieved March 20, 2011.
- "Bartles, L. M. (February, 2004). Partisan Politics and the U.S. Income Distribution. Woodrow Wilson School of Public and International Affairs" (PDF). Retrieved June 20, 2007.
- Paul Krugman, The Conscience of a Liberal, pp. 47–52
- "The New York Times"Johnston, D. (June 5, 2005). Richest Are Leaving Even the Richest Far Behind. . Retrieved June 20, 2007.
- immigration restrictions of the Immigration Act of 1924
- Paul Krugman, The Conscience of a Liberal, p. 49
- "According to a wide range of scholarly research, unions have two main effects relevant to the Great Compression." Paul Krugman, The Conscience of a Liberal, p. 51
- Paul Krugman, The Conscience of a Liberal, pp. 52, 64, 66
- "The Distribution of Household Income and Federal Taxes 2011". Congressional Budget Office, US Government. November 2014.
- Piketty&Saez-Income Inequality in the United States, 1913-1998"-See Excel Table A3
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p.x
- Saez & Piketty, "How Progressive is the U.S. Federal Tax System? A Historical and International Perspective".
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p. xi
- "Trends in the Distribution of House Income Between 1979 and 2007". Journalist's Resource.org.
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. see pp. ix–x, with definitions on ii–iii, and pp. 10–12
- "The Distribution of Household Income and Federal Taxes, 2008 and 2009". Congressional Budget Office, US Government. July 2012.
- "Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009". Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs. Federal Reserve Board, Washington, D.C. p. 16.
- Tcherneva, Pavlina R. (August 2014). "This Chart Shows Just How (Un)Equal Things Are During A ‘Champion’ Of The 99%’s Administration". Independent Journal Review. Retrieved 13 September 2014.
- Binyamin, Appelbaum (September 4, 2014). "Fed Says Growth Lifts the Affluent, Leaving Behind Everyone Else". New York Times. Retrieved 13 September 2014.
- Saez, Emmanuel (September 3, 2013). "Striking it Richer: The Evolution of Top Incomes in the United States". UC Berkeley. Retrieved September 18, 2014.
- "Income Inequality From Generation To Generation" by Robert Lenzner, Forbes (March 26, 2012)
- Productivity growth closely matched that of median family income until the late 1970s when median American family income stagnated while productivity continued to climb. Chart comparing productivity growth and real median family income growth in the United States from 1947–2009. Source: EPI Authors' analysis of Current Population Survey Annual Social and Economic Supplement Historical Income Tables, (Table F–5) and Bureau of Labor Statistics Productivity – Major Sector Productivity and Costs Database (2012)
- Global wage growth stagnates, lags behind pre-crisis rates, ILO, December 5, 2014.
- The Great Divergence By Timothy Noah
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p. 13
- ."Federal Reserve Bank of San Francisco"Yellen, J. L. (November 6, 2006). Speech to the Center for the Study of Democracy at the University of California, Irvine. . Retrieved June 20, 2007.
- Inequality in America. The rich, the poor and the growing gap between them June 15, 2006
- Krugman, Paul (October 20, 2002). "For Richer". The New York Times.
- the superstar hypothesis was coined by the Chicago economist Sherwin Rosen) used the example of the passing of the hundreds of comedians that made a modest living at live shows in the borscht belt and other places in bygone days that have been replaced by a handful of superstar TV comedians.
- estimate by economist George Borjas, quoted in Conscience of a Liberal, p. 34
- Furceri, D.; Loungani, P. (February 13, 2014). "Who let the Gini out? Searching for sources of inequality". VOXEU. Retrieved February 13, 2014.
- Harvard Business Review-William Lazonick-Profits without Prosperity-September 2014
- Hacker, Jacob S. Winner-Take-All Politics, (Simon & Schuster, 2010), pp. 62–4, 246
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p.20 and figure 12.
- Paul Ryan: Inequality, Take Two, Timothy Noah, The New Republic, November 18, 2011
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. pp. 12–13 and table 1
- NYT-Neil Irwin-You Can't Feed a Family with GDP-September 2014
- Center for American Progress-The Middle Class Squeeze-September 2014
- Chairman Alan Krueger Discusses the Rise and Consequences of Inequality at the Center for American Progress-January 12, 2012
- Winner-Take-All Politics (book) by Jacob S. Hacker and Paul Pierson p. 75
- "CBO Report Shows Rich Got Richer, As Did Most Americans: View". businessweek.com. October 31, 2011.
- Oligarchy, American Style by Paul Krugman (November 3, 2011)
- "The Broken Contract", By George Packer, Foreign Affairs, November/December 2011
- Christoffersen, John (October 14, 2013). "Rising inequality 'most important problem,' says Nobel-winning economist". St. Louis Post-Dispatch. Retrieved October 19, 2013.
- Cassidy, John (March 31, 2014). by Thomas Piketty)"Capital in the Twenty-first Century"Forces of Divergence Is surging inequality endemic to capitalism? (review of . New Yorker. Retrieved March 31, 2014.
- "Two Americas: One Rich, One Poor? Understanding Income Inequality in the United States," by Rea Hederman, Jr. and Robert Rector, Heritage Foundation (August 24, 2004)
- Sowell, Thomas "Perennial Economic Fallacies", Jewish World Review February 7, 2000, URL accessed November 3, 2011.
- A Look at the Global One Percent By Allan H. Meltzer, Wall Street Journal (March 9, 2012)
- "The United States of Inequality, Entry 10: Why We Can't Ignore Growing Income Inequality," by Timothy Noah, Slate (September 16, 2010)
- "U.S. Income Inequality: It’s Not So Bad," by Thomas A. Garrett, Federal Reserve Bank of St. Louis (Spring 2010)
- Thomas A. Garrett. U.S. Income Inequality: It’s Not So Bad. Inside the Vault. Spring 2010. Federal Reserve Bank of St. Louis.
- Alesina, Alberto; Dani Rodrick (May 1994). "Distributive Politics and Economic Growth". Quarterly Journal of Economics 109 (2): 465–90.
- Castells-Quintana, David; Vicente Royuela (2012). "Unemployment and long-run economic growth: The role of income inequality and urbanisation". Investigaciones Regionales 12 (24): 153–73. Retrieved October 17, 2013.
- Inequality and crises: coincidence or causation? Paul Krugman
- "Investment Outlook: Six Pac(k)in," PIMCO (October 2011)
- "Wall Street Bolshies Watch," by Timothy Noah, The New Republic (October 3, 2011)
- Study covers years between 1950 and 2006. Berg, Andrew G.; Ostry, Jonathan D. (2011). "Equality and Efficiency". Finance and Development (International Monetary Fund) 48 (3). Retrieved September 10, 2012.
- Widening income gap is hurting the economy, survey says. The Associated Press. December 18, 2013. Retrieved December 18, 2013.
- Josh Boak (August 5, 2014). Inequality Is Really Hurting The Economy, S&P Warns. The Huffington Post. Retrieved August 5, 2014.
- Capitalism in Long Term Stagnation and Decay – Gar Alperovitz on Reality Asserts Itself (3/5). The Real News, January 26, 2014. Retrieved January 26, 2014.
- Reich, Robert (February 8, 2014). The War on the Poor and Middle-Class Families. Truthdig. Retrieved February 8, 2014.
- Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future (p. 85). Norton. Kindle Edition. See also: Karen E. Dynan, Jonathan Skinner, and Stephen P. Zeldes, “Do the Rich Save More?,” Journal of Political Economy 112, no. 2 (2004): 397– 444.
- "More or Less", by Branko Milanovic, Finance & Development (September 2011) Vol. 48, No. 3
- Three Cheers for Income Inequality
- Corley-Coulibaly, Marva; Prasadm, Naren ; Sekerler Richiardi, Pelin (October 2011). "Tax reform for improving job recovery and equity". World of Work Report. International Institute for Labour Studies. pp. 97–120.
- Escudero, Verónica; López Mourelo, Elva (2012). "Chapter 3, Fiscal consolidation and employment growth". In Torres, Raymond (ed.). World of Work Report. International Institute for Labour Studies. pp. 59–80.
- Kenworthy, Lane (December 3, 2007). "Does More Equality Mean Less Economic Growth?".
- "Does inequality prevent economic growth?" by Jared Bernstein, Salon (October 1, 2012)
- Yet Another Reason Why Thomas Piketty' Is Wrong, Forbes, June 5, 2014
- Inequality A Piketty problem?, Economist, May 24, 2014
- Supreme Court-Louis K. Liggett Co. vs. Lee (288 U.S. 517)-Justice Brandeis Dissent-Text around Footnote 55
- Lo, Andrew W. "Reading About the Financial Crisis: A 21-Book Review". 2012. Journal of Economic Literature . Retrieved November 27, 2013.
- Koehn, Nancy F. (July 31, 2010). by Raghuram G. Rajan)"Fault Lines: How Hidden Fractures Still Threaten the World Economy"A Call to Fix the Fundamentals (Review of . New York Times. Retrieved November 20, 2013.
- Pigou, Arthur C. (1932). "Part I, Chapter VIII". The Economics of Welfare (4th ed.). London: Macmillan and Co. Retrieved August 11, 2014.
- Lynn, Barry C.; Longman, Phillip (March–April 2010). "Who Broke America’s Jobs Machine?". Washington Monthly. Retrieved August 11, 2014.
- Vanishing Trials: The Bankruptcy Experience Elizabeth Warren*
- Krugman, Paul, The Conscience of a Liberal, W W Norton & Company, 2007, (pp. 246–7)
- Paul Ryan on Income Inequality and Upward Mobility Diane Ellis, Ed. · November 28, 2011
- Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data since 1937 Wojciech Kopczuk, Emmanuel Saez, Jae Song, September 15, 2007, Figure 4B
- Vasia Panousi; Ivan Vidangos; Shanti Ramnath; Jason DeBacker; Bradley Heim (Spring 2013). "Inequality Rising and Permanent Over Past Two Decades". Brookings Papers on Economic Activity. Brookings Institution. Retrieved March 23, 2013.
- Krugman, Paul. "The Rich, the Right, and the Facts: Deconstructing the Income Distribution Debate"prospect.org, December 19, 2001
- Millionaire For A Day Paul Krugman. November 3, 2011,
- "Harder for Americans to Rise From Lower Rungs", By Jason DeParle (January 4, 2012)
- Here is the source for the "Great Gatsby Curve" in the Alan Krueger speech at the Center for American Progress on January 12
- Corak graphs 25 countries, Krueger limits his to developed countries and lists 10
- NYT-Jared Bernstein-Poverty and Inequality, in Charts-January 13, 2014
- Matt Bruenig (January 17, 2014). We Would Have Eliminated Poverty Entirely by Now if Inequality Hadn't Skyrocketed. Moyers & Company. Retrieved January 18, 2014.
- Zachary A. Goldfarb (December 9, 2013). Study: U.S. poverty rate decreased over past half-century thanks to safety-net programs. The Washington Post. Retrieved January 15, 2015.
- Gilens & Page (2014) Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, Perspectives on Politics, Princeton University. Retrieved April 18, 2014.
Piketty, Thomas (2014). Capital in the Twenty-First Century. Belknap Press. ISBN 067443000X p. 514:
- "the risk of a drift towards oligarchy is real and gives little reason for optimism about where the United States is headed."
- Josh Harkinson (September 13, 2013). Chart: Washington Gridlock Linked to Income Inequality. Mother Jones. Retrieved September 16, 2013.
- Chris Gentilviso (August 21, 2013). Senate Represents The Wealthy First: Study. The Huffington Post. Retrieved September 18, 2013.
- Paul Krugman-NYT-Pollution and Politics
- The Monkey Cage-Erik Voeten-Polarization and Inequality-October 2011
- Politico-Jonathan Martin-President Obama, Republicans fight the class war-April 15, 2013
- NYT-Ben Stein-In Class Warfare, Guess Which Class is Winning"-November 26, 2006
- Income inequality in the United States, p. 3, at Google Books By Robert Frank
- Smith, Hedrick, Who Stole the American Dream, Random House pp. xviii–xix
- Smith, Hedrick, Who Stole the American Dream, Random House p. xix
- Stiglitz, Joseph (June 2012). "We've been brainwashed".
- Stiglitz, Joseph E. (June 4, 2012). The Price of Inequality: How Today's Divided Society Endangers Our Future (p. 92). Norton. Kindle Edition.
- Joseph E. Stiglitz (May 2011). Of the 1%, by the 1%, for the 1%. Vanity Fair. Retrieved August 1, 2013.
- This is despite the fact that low income taxpayers are less likely to be able to deduct their giving for tax purposes as they are less likely to use itemized deductions on their income tax.
- Stern, Ken (April 2013). "Why the Rich Don't Give to Charity". Atlantic. Retrieved March 27, 2013.
- Explanations for this effect include the rise of gated communities and general isolation of the well off from exposure to social problems of poverty, and a correlation of ambition for monetary gain with lack of interest in others and their problems. Why the Rich Don't Give to Charity
- A study confined to non-Hispanic whites in US and England also showed the effect. (Pickett and Wilkinson, The Spirit Level, 2011, p. 177)
- Countries of similar cultures and different levels of equality – Spain and Portugal – showed difference in the index, while countries with very different cultures and ways of achieving equality – Nordic countries and Japan – charted closer to each other. (Pickett and Wilkinson, The Spirit Level, 2011, p. 183)
- The effect was worse among low class/education level in high inequality countries, but continued through all occupational classes and was still significant among the highest. (Pickett and Wilkinson, The Spirit Level, 2011, pp. 178–79)
- Statistics and graphs from Wilkinson and Pickett research.
- "The Spirit Level: How 'ideas wreckers' turned book into political punchbag," by Robert Booth, The Guardian (August 13, 2010)
- Joshua Holland (April 19, 2014). High Inequality Results in More US Deaths Than Tobacco, Car Crashes and Guns Combined. Moyers & Company. Retrieved July 1, 2014.
- John Helliwell, Richard Layard and Jeffrey Sachs. World Happiness Report. The Earth Institute at Columbia University, p. 8. Retrieved October 1, 2013.
- "Policy Implications of Capital-Biased Technology: Opening Remarks" by Paul Krugman, New York Times (December 28, 2012)
- "The Impact of the Upward Redistribution of Wage Income on Social Security Solvency" Center for Economic and Policy Research, February 12, 2013
- "The Wrong Inequality," by David Brooks, New York Times (31 October 2011)
- "The White Underclass," by Niholas D. Kristof, New York Times (8 February 2012)
- Hayek, Friedrich A. Von. Law, Legislation, and Liberty. Volume 2: The Mirage of Social Justice. Chicago: University of Chicago, 1976. 33. Print.
- Hayek, Friedrich A. Von. The Constitution of Liberty. Chicago: University of Chicago, 1960. 231. Print.
- "Why Obama’s New Populism May Sink His Campaign," by William Galston, The New Republic (December 17, 2011)
- "Why the President’s Campaign Shouldn’t Focus on Inequality" by William Galston, The New Republic (May 3, 2012) accessed May 5, 2012
- NBC/WSJ: Americans prefer message focused on fairness over anti-government or inequality argument by Jed Lewison dailykos.com April 20, 2012
- by USA Today/Pew Research Center
- Susan Page and Kendall Breitman (January 23, 2014). Poll: United we stand on wealth gap. USA Today. Retrieved January 24, 2014.
- Pew Center-Most See Inequality Growing, But Partisans Differ Over Solutions-January 23, 2014
- Lars Osberg and Timothy Smeeding. "Fair Inequality? Attitudes Toward Pay Dfferentials: The United States in Comparative Perspective, " American Sociological Review, 71, 2006, pp. 450–73.
- Norton, M. I., & Ariely, D., "Building a Better America – One Wealth Quintile at a Time", Perspectives on Psychological Science, January 2011 6: 9–12
- Joseph E. Stiglitz (2012) The Price of Inequality. New York: W.W.Norton
- Adam Bee (February 2012). "Household Income Inequality Within U.S. Counties: 2006–2010". Census Bureau, U.S. Department of Commerce.
- Daniel H. Cooper, Byron F. Lutz, and Michael G. Palumbo (September 22, 2011). "Quantifying the Role of Federal and State Taxes in Mitigating Income Inequality". Federal Reserve, Boston, United States.
- Chokshi, Niraj (August 11, 2014). "Income inequality seems to be rising in more than 2 in 3 metro areas". Washington Post. Retrieved 13 September 2014.
- "Income, Poverty and Health Insurance Coverage in the United States: 2009". Newsroom.
- Table 2.9 of World Development Indicators: Distribution of income or consumption The World Bank (2014)
- "Factbook"CIA. (June 14, 2007). Field Listing – Distribution of family income – Gini index. . Retrieved June 20, 2007.
- Growing Unequal? Income distribution and poverty in OECD countries (summary) OECD (2008)
- Organization for Economic Cooperation and Development, Growing Unequal? Income Distribution and Poverty in OECD Countries (2008)
- EurLIFE – Gini index. Eurofound
- John Cassidy-New Yorker-American Inequality in Six Charts-November 2013
- For example, Ingvar Kamprad's family is one of the richest in the world (by some accounts with wealth between 50 and 90 billion U.S. dollars. but because of offshore arrangements the family's wealth and income never shows up in Swedish statistics. (see: "Who's really the world's richest?" CNNMoney.com, April 6, 2004)
- Peter Baldwin (2009). The narcissism of minor differences: how America and Europe are alike. Oxford University Press. ISBN 978-0-19-539120-6
- Tax evasion is a national pastime afflicting southern Europe. CNN. November 2, 2011
- Low-Income Italians Own An Awful Lot Of Supercars, Private Jets And Yachts. Business Insider. January 12, 2012
- David Leonhardt and Kevin Quealy (April 22, 2014). The American Middle Class Is No Longer the World’s Richest. The New York Times. Retrieved April 30, 2014.
- ki Ito, Ian Katz and Ilan Kolet (19 August 2014). Only Rich Know Wage Gains With No Raises for U.S Workers. Bloomberg. Retrieved 23 August 2014.
- Yellen, Janet. "Perspectives on Inequality and Opportunity from the Survey of Consumer Finances". Retrieved October 17, 2014.
- Grusky, David B. (March–April 2013). "What to Do about Inequality". Boston Review. Retrieved April 6, 2013.
- Federal Reserve Economic Database-Unemployment by Educational Attainment-Retrieved October 21, 2014
- Salles, Joaquim (October 1, 2014). "This Country Just Abolished College Tuition Fees". ThinkProgress.org. Retrieved October 21, 2014.
- Wealth Gap Widens In Rich Countries As Austerity Threatens To Worsen Inequality: OECD. The Huffington Post. Retrieved May 14, 2013
- Kenworthy, Lane (February 2014). America's Social Democratic Future. Foreign Affairs. Retrieved February 2, 2014. See also: Kenworthy, Lane (2014). Social Democratic America. Oxford University Press. ISBN 0199322511
Kenworthy, Lane (1999). "Do Social-Welfare Policies Reduce Poverty? A Cross-National Assessment". Social Forces 77 (3): 1119–1139.
Bradley, D., E. Huber, S. Moller, F. Nielsen, and J. D. Stephens (2003). "Determinants of Relative Poverty in Advanced Capitalist Democracies". American Sociological Review 68 (1): 22–51.
- Gould, Elise and Wething, Hilary (July 24, 2012). "U.S. poverty rates higher, safety net weaker than in peer countries." Economic Policy Institute. Retrieved February 2, 2014.
- Woods, Thomas. "Race, Inequality, and the Market".
- Thompson, Derek (February 17, 2012) "The Entrepreneur State: Safety Nets for Startups, Capitalism for Corporations" The Atlantic
- Livingston, Jay (November 10, 2011) "Start-Ups and Safety Nets" The Society Pages: Sociological Images
- "The Distribution of Household Income and Federal Taxes, 2010". The US Congressional Budget Office (CBO). December 4, 2013. Retrieved January 6, 2014.
- Lowrey, Annie (January 4, 2013). "Tax Code May Be the Most Progressive Since 1979".
- CBO-Trends in the Distribution of Household Income Between 1979 and 2008, p. 20
- Rolling Stone-Paul Krugman-In Defense of Obama-October 2014
- Annie Lowrey (April 16, 2012). For Two Economists, the Buffett Rule Is Just a Start. The New York Times. Retrieved August 17, 2013.
- Nader, Ralph (April 18, 2013). Time for a Sales Tax on Wall Street Financial Transactions. The Huffington Post. Retrieved June 5, 2013.
- 1% Wall Street Sales Tax. UFAA.
- Erika Eichelberger (October 30, 2013). Economists to Congress: It's Time for a "Robin Hood Tax" on the Rich. Mother Jones. Retrieved November 15, 2013.
- NYT-Warren Buffett-A Minimum Tax for the Wealthy-November 25, 2012
- Baker, Dean (August 26, 2014). "How to Think About the Corporate Income Tax". Center for Economic and Policy Research. Retrieved November 16, 2014.
- Baker, Dean (August 26, 2014). "Subverting the Inversions: More Thoughts on Ending the Corporate Income Tax". Center for Economic and Policy Research. Retrieved November 16, 2014.
- Baker, Dean (August 29, 2014). "More Cheap Thoughts on the Corporate Income Tax". Center for Economic and Policy Research. Retrieved November 26, 2014.
- Cooper, David and Hall, Doug (March 13, 2013).Raising the federal minimum wage to $10.10 would give working families, and the overall economy, a much-needed boost. Economic Policy Institute. Retrieved July 24, 2013.
- Hananel, Sam (August 29, 2013). Labor Secretary Thomas Perez: Fast Food Strikes Show Need For Minimum Wage Hike The Huffington Post. Retrieved August 30, 2013.
- The Economist-The Logical Floor-December 2013
- U.S. Department of Labor-History of Federal Minimum Wage Rates-Retrieved January 11, 2013
- U.S. Department of Labor – Minimum Wage Laws in the States – See commentary at bottom of web page – Retrieved January 11, 2013
- Economist Statement on the Federal Minimum Wage. Economic Policy Institute. Retrieved January 29, 2014.
- CBO (February 2014). "The Effects of a Minimum Wage Increase on Employment and Family Income". Retrieved November 16, 2014.
- Hanley, Lawrence J. (August 3, 2012). A Maximum Wage Law? The Huffington Post. Retrieved July 24, 2013.
- EPI-Mishel & Shabadish-CEO Pay in 2012 Was Extraordinarily High Relative to Typical Workers and Other High Earners-June 2013
- Allan Sheahen (August 26, 2013). Fulfilling One of MLK's Dreams – A Basic Income Guarantee. The Huffington Post. Retrieved January 29, 2014.
- Robert H. Frank (November 23, 2006). "The Other Milton Friedman: A Conservative With a Social Welfare Program".
- RAWIllumination.net. RAWIllumination.net (August 9, 2011). Retrieved on 2013-07-29.
- Danny Vinik (November 20, 2013). Paul Ryan Should Get Behind This Plan To Give Everyone Free Money. Business Insider. Retrieved January 26, 2014.
- 2010 Platform: Economic Justice & Sustainability. Green Party of the United States
- Konczal, Mike (March 30, 2013). "How an anti-rentier agenda might bring liberals, conservatives together". Washington Post. Retrieved April 6, 2013.
- Richard Wolff on Curing Capitalism. Moyers & Company, March 22, 2013; See also: Wolff, Richard D. (2012). Democracy at Work: A Cure for Capitalism. Haymarket Books. ISBN 1608462471.
- 11-20-13: MK Asante's Memoir "Buck" and Gar Alperovitz on Using Democracy to Reduce Inequality. WYPR. Retrieved January 29, 2014; See also: Alperovitz, Gar (2013). What Then Must We Do?: Straight Talk about the Next American Revolution. Chelsea Green Publishing. ISBN 1603585044
- Erik Reece (October 4, 2013). The End of Illth: In search of an economy that won’t kill us. Harper's Magazine. Retrieved January 9, 2014.
- "Wall Street Bolshevism, Part 3," by Timothy Noah, The New Republic (October 5, 2011)
- Smeeding, T. (2005). Public policy, economic inequality, and poverty: The United States in comparative perspective. Social Science Quarterly, 86, 956–983.
- "US Census Bureau. (2005). Historical Income Tables – Income Equality." (PDF). Archived from the original on June 26, 2007. Retrieved June 20, 2007.
- "US Census Bureau. (2006). Measures of Individual Earnings Inequality for Full-Time, Year-Round Workers by Sex: 1967 to 2005.". Archived from the original on June 17, 2007. Retrieved June 21, 2007.
- a gini index increase of 15% as opposed to CBO's increase in gini index of 33% (cbo "Trends in Distribution" study p. 7)
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. pp. 6–7
- A 2010 census study showed the top 20 percent of Americans earned 49.4% of the nation’s income, compared with the 3.4% earned by Americans living below the poverty line (roughly 15 percent of the population). This earnings ratio of 14.5 to 1 was an increase from the 13.6 to 1 ratio just two years earlier, and a significant rise from the historic low of 7.69 to 1 in 1968
- "Associated Press. (September 28, 2010).". Retrieved March 20, 2011.
- The Distribution of US Wealth, Capital Income and Returns since 1913, Emmanuel Saez, Gabriel Zucman, March 2014
- New Perspectives On Income Mobility and Inequality, Gerald Auten, Geoffrey Gee, and Nicholas Turner, National Tax Journal, December 2013.
- Income Inequality: It's Not So Bad, Federal Reserve Bank of St. Louis, Spring 2010
- Income Growth and Income Inequality: The Facts May Surprise You, Brookings Institution, January 2014
- ."US Census Bureau"Stoops, N. (June, 2004). Educational Attainment in the United States: 2003. (PDF). Retrieved June 21, 2007.
- "US Census Bureau. (2006). Selected Characteristics of Households, by Total Money Income in 2005.". Retrieved June 21, 2007.
- 26 (4), 401–418."Review of Income and Wealth"Datta, B., & Meerman, J. (December 18, 1980). Household Income or Household Income Per Capita in Welfare Comparisons. . Retrieved June 20, 2007.
- Consumption and the Myths of Inequality, K. Hassett and A. Mathur, Wall Street Journal, October 24, 2012
- ."Cato Institute"Reynolds, A. (January 8, 2007). Has U.S. Income Inequality Really Increased?. (PDF). Retrieved June 20, 2007.
- ."Heritage Foundation"Rector, R., & Herderman Jr., R. (August 24, 2004). Two Americas, One Rich, One Poor? Understanding Income Inequality In the United States. . Retrieved June 20, 2007.
- Rakesh Kochhar and D’Vera Cohn (October 3, 2011) "Fighting Poverty in a Bad Economy, Americans Move in with Relatives" Pew Research Center
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p. 2
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p. 4
- "Aron-Dine, A. & Sherman, A. (January 23, 2007). New CBO Data Show Income Inequality Continues to Widen: After-tax-income for Top 1 Percent Rose by $146,000 in 2004.". Retrieved November 24, 2007.
- "Conservative Inequality Denialism," by Timothy Noah The New Republic (October 25, 2012)
- Schiller, Bradely (2003). The Economy Today: Ninth Edition. New York, NY: McGraw-Hill.
- "Income distribution – Inequality : Income distribution – Inequality – Country tables". OECD. 2012.
- N. C. Kakwani (April 1977). "Applications of Lorenz Curves in Economic Analysis". Econometrica 45 (3): 719–28.
- Chu, Davoodi, Gupta (March 2000). "Income Distribution and Tax and Government Social Spending Policies in Developing Countries". International Monetary Fund.
- Chen Wang, Koen Caminada, and Kees Goudswaard (July–September 2012). "The redistributive effect of social transfer programmes and taxes: A decomposition across countries". International Social Security Review 65 (3): 27–48.
- Salvatore Babones (February 14, 2012). U.S. Income Distribution: Just How Unequal? inequality.org, Institute for Policy Studies. Retrieved September 7, 2013.
- "Thinking Clearly About Economic Inequality", Will Wilkinson, Cato Institute 2009
- Johnson, Smeeding, Tory, "Economic Inequality" in Monthly Labor review of April 2005, table 3.
- see also "Consumption and the Myths of Inequality", by Kevin Hassett and Aparna Mathur, Wall Street Journal, October 24, 2012
- Attanasio, Orazio; Hurst, Erik; Pistaferri, Luigi (2012). "The Evolution of Income, Consumption, and Leisure Inequality in The US, 1980–2010". NBER Working Papers #17982.
- Congressional Budget Office: Trends in the Distribution of Household Income Between 1979 and 2007. October 2011. p. 5
- The Way Forward By Daniel Alpert, Westwood Capital; Robert Hockett, Professor of Law, Cornell University; and Nouriel Roubini, Professor of Economics, New York University, New America Foundation, October 10, 2011
- Plumer, Brad. "‘Trickle-down consumption’: How rising inequality can leave everyone worse off". 27 March 2013. Washington Post. Retrieved March 27, 2013.
- Inequality and crises: coincidence or causation? Paul Krugman (see last chart: Inequality and household debt)
- CNBC-400 Richest Americans now worth $2 trillion-September 16, 2013
- The Economist-Free exchange-Forget the 1%-November 8, 2014
- William Donhoff-Who Rules America?-Retrieved November 9, 2014
- Willford I. King Income inequality in the United States at Google Books, 1915 – at the time most comprehensive study to date
- Larry M. Bartels Income inequality in the United States at Google Books Princeton: Princeton University Press. 2008. 328 pp.
- Greg J. Duncan, Richard J. Murnane Restoring Opportunity: The Crisis of Inequality and the Challenge for American Education, Harvard Education Press, 2013
- Barnes, L. (2013). Does Median Voter Income Matter? The Effects of Inequality and Turnout on Government Spending. Political Studies, 61(1), 82-100.
- Duncan, G. J., & Murnane, R. J. (2014a). Growing income inequality threatens American education. Phi Delta Kappan, 95(6), 8-14.
- Galbraith, J. K., & Hale, J. (2008). State Income Inequality and Presidential Election Turnout and Outcomes. Social Science Quarterly (Wiley-Blackwell), 89(4), 887-901.
- Garand, J. C. (2010). Income Inequality, Party Polarization, and Roll-Call Voting in the U.S. Senate. Journal of Politics, 72(4), 1109-1128.
- Gilman, M. (2014). A Court For the One Percent: How the Supreme Court Contributes to Economic Inequality. Utah Law Review, 2014(3), 389-463.
- Jin Yi, D. (2012). No taxation, no democracy? Taxation, income inequality, and democracy. Journal of Economic Policy Reform, 15(2), 71-92.
- Nau, M. (2013). Economic Elites, Investments, and Income Inequality. Social Forces, 92 (2), 237-461.
- Levy, Frank (2008). "Distribution of Income". In
- A Giant Statistical Round-up of the Income Inequality Crisis in 16 Charts from The Atlantic
- Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze – by Dr. Edward Wolff
- The Great Divergence 2010: What's causing America's growing income inequality?, Timothy Noah, Slate
- Income Gap Widens: 2010 Census Finds Record Gap Between Rich And Poor by Hope Yen, AP
- It's the Inequality, Stupid: 11 Charts that Explain Everything that's Wrong with America – March 2011 issue of Mother Jones
- The Top 1 Percent: What Jobs Do They Have? (What percentage of what occupations are in the top 1% income bracket) New York Times January 15, 2012
- What Percent Are You? (Enter your household income and see how you rank) New York Times January 14, 2012
- Islands of High Income
- Bill Moyers: The United States of Inequality
- Richard Wilkinson: How economic inequality harms societies. TED, Oct 2011.
- Economic Inequality is Real, Personal, Expensive, and it was Created. We'll show you how. Economic Policy Institute, 2013.
- TED talk on inequality given by Nick Hanauer. on YouTube
- This Map Will Show You The Staggering Growth In Income Inequality Over The Past 40 Years. The Huffington Post, September 2013.
- The End of Illth: In search of an economy that won’t kill us. Harper's Magazine, October 4, 2013.
- Center on Budget & Policy Priorities – A Guide to Statistics on Historical Trends in Income Inequality – December 2013
- Five Economic Reforms Millennials Should Be Fighting For. Rolling Stone, January 3, 2014.
- Income Inequality in the United States: Hearing Before the Joint Economic Committee, Congress of the United States, One Hundred Thirteenth Congress, Second Session, January 16, 2014
- "Wealth Gap" – A Guide (AP News – January 27, 2014).