It isn’t often that I read two articles about income inquality in one day, let alone in publications as disparate as the Wall Street Journal and Harvard Magazine. But yesterday was just such a day, and it inspired me to write about these two articles.
First, the WSJ reported on some new IRS data . According to this data, the number of people with a net worth of $20 million or more was 47,000 in 2004, the most recent year for which data was available. This figure is up 62% from 1998. Other data showed that to be one of the country’s top 400 earners in 2005 you needed to earn at least $100.3 million, up from $74.5 million just a year earlier.
Then Harvard Magazine did a long survey of research by various Harvard professors on income equality and its impact on people and society. There was so much in this article that I don’t even need to comment. I am merely going to summarize some key findings and encourage you to read the entire article, which is available free online.
A) The share of total national income earned by the top 1 percent hit an all time high of 21.1 percent in 1928 — the heart of the Gilded Age. It dropped steadily to 10 percent in the 1960’s and 1970’s. In 2006 it reached 20.3 percent.
B) Americans at the 95th percentile of income or higher can expect to live nine more years than Americans at the 10th percentile or below.
C) On the Gini scale of inequality, which runs from 0 (totally equal) to 1 (Bill Gates owns it all), the US rating rose from .35 in 1965 to .44 today. Other countries around .4 include Russia and Mali.
D) The average CEO made 25 times what the average worker made in 1965. Today it’s 250 times.
E) States with the largest black populations have the least generous welfare systems.
F) In 1950 average public college tuition was 4 percent of median family income. In 2005 it was 11 percent.
There is both additional data and analysis in the full article. The article does not, however, show the methodology behind any of these studies. But I will note that all the studies were done by Harvard professors, who are generally pretty good at this stuff.