Share of income of top percentiles of U.S. households
November 28, 2008
Note: This post deals with the proportion of total US income taken up by the households controlling the most income. The percentiles of the income distribution are given in a different post: Household income distribution, 2007.
The chart below is based on data of Saez and Piketty (Table A3), who rely on IRS publications.
The year 2006, the latest year for which data is available, has seen concentration of income by the top percentiles which has not been observed since the late 1920’s. Following a three-decade long process of increasing concentration of income by top percentiles, in 2006, a tenth of the U.S. population controlled half the national income, a hundredth of the population controlled a quarter of the income, a thousandth of the population controlled an eighth of the income and one ten-thousandth of the population controlled one-sixteenth of the income. Thus, the top x percentile group controls about 2 times more income than the top x/10 percentile group.
It is important, however, to note that even at the years of least concentration – the late 1950’s to the late 1970’s – the top percentiles controlled very disproportionate shares of the national income. The top 10% controlled at least one third of the income throughout the 20’s century. During those “golden years” of income dispersal, the top x percentile group controlled about 3 times more income than the top x/10 percentile group. The change in the share between the “golden years” and today is therefore not very significant at the top 10% level, but, by the repeated multiplication by a factor of 3/2, it is much more significant at the top 0.01 percentile level (these households now control (1/2)4 = 1/16 of the income, as opposed to controlling a mere (1/3)4 = 1/81 of the national income in, say, 1960).
One interesting implication of the fact that half the national income goes to the top 10% of households: if the national income were re-distributed so that each household received an equal share of the national income, the income available to each household would then be equal to the income of the household which currently is at the 90% percentile of the income distribution. Thus each household in the U.S. would, in such a situation, be making over $100,000 annually.
Update (22-Oct-2009): Added data for top 400 households for the years 1992-2006, made available by the IRS. The top 400 households (out of about 150 million) represent the top 0.0002667% of households. This tiny fraction of the households controlled in 2006 over 1.3% of the entire national income. The pattern of income share of top income groups described above holds tolerably well for this group as well: (1/2) to the power of log10(400 / 150 million) = 2.1%.
Pro Bono Statistics 
November 29, 2008 at 1:58 am
The economic value of our natural resources and, importantly, our land — a natural resource whose value is augmented by our common spending, including pork spending — is currently mostly privatized. Sounds good, that the 68% or so of us who are homeowners get to share in it, but the reality is that urban land values are so awesomely high that the privatization of land value mostly benefits the wealthiest among us, and particularly the shareholders in corporations and REITS.
We don’t even measure that land value.
But there is a block, roughly an acre, in midtown Manhattan, which is rumored to be worth $400 million to $1.2 billion — yes, with a b — AS A TEARDOWN.
The annual value of that — at 5% — would be $20 million to $60 million — which, as we do things now, sits in — *pours into!* — private pockets. It should be treated as our common treasure.
Google wealthandwant and/or lvtfan for more abotu why this approach is just, wise, efficient, environmentally sound, administrable and otherwise smart and fair.
February 15, 2009 at 2:57 am
[…] 15, 2009 During the last 90 years the U.S. has experienced large changes in the share of the total national i…The (pre-tax) share of the richest 0.01% of households, for example, was under 1% in the late […]
May 20, 2009 at 3:00 am
[…] The BLS groups air travel together with cruiseboat travel and mass transit under the heading “public transportation”. Most of the amount under this heading is spent on air travel, with the proportion increasing with income. The increase in the amount spent on “public transportation” is therefore a good indicator of the distance covered in travel by air. The expenditure within this category is overwhelmingly by the rich. The top 10% of households spend about half of the total expenditure on “public transportation” – a proportion similar to their share in the total income. […]
January 26, 2012 at 5:03 am
Who would bother to work if everyone were guaranteed their proportionate share of wealth and income?
January 26, 2012 at 6:19 am
Hi Dennis,
A lot of people work without a material incentive – work has many other rewards. That said, I think few people advocate having completely equal shares of wealth and income without any work requirement, enforced one way or another. I support a reduction in income inequalities through the Basic Income Guarantee policy, but not a complete elimination of material inequalities.