U.S. Distribution of Income

Running head : U .S . Distribution of Income

U .S . Distribution of Income

[The name of the writer appears here]

[The name of institution appears here]

Introduction

Is the United States a country of high or low inequality ? The answer , in part , depends on one 's viewpoint . As we shall see , the question of trends is more compelling than the level of inequality : The reversal of a long-term trend , away from declining and into rising inequality , is more meaningful than static measurement at any given time or under any particular definition

p The static measurement depends in part on how the population is defined No one expects little children to have an adult income , and no one expects all adults to have the same level of income . It is a truism that incomes usually rise from youth through middle life and then fall off at retirement , when family responsibilities (other than for health care are also on the decline . Some inequality between families should thus be expected as a consequence of the logic of the life cycle

The balance of the "correct " degree of inequality will depend on what we expect society to accomplish , both for its members and for the nation as a whole . One of the myths about the United States is that inherited wealth is of secondary importance to earned wealth "Shirtsleeves to shirtsleeves in three generations " has been cited as a family cycle working against permanent economic class formation , but actually , some class barriers are more rigid than the adage would let us expect (Rothman 1978 . They may be more important to power than to welfare

The historical record will show that the United States at the start of independent history was not particularly egalitarian . Plantations in the South and wealthy merchant houses in the Northeast stood so high above the income levels of ordinary people , and controlled such a substantial portion of all the money income as conventionally understood , that the income distribution must have been rather unequal . From the Civil War to the end of the nineteenth century , inequality appears to have increased even further . Today the pressing problem is that the trend has turned again : Income distribution in the United States has become visibly more unequal at least since the 1970s

How much inequality we find often depends on the statistical framework This will be evident when we compare inequality measures for several concepts of population that exist side by side at the same time , and even from the same statistical source

For the year 1979 we can cite five different such ratios , four of them from the 1980 Census of Population and one from Internal Revenue Service data on income tax returns . Depending on what we examine , we get

Households .829

Families .862

Unrelated individuals .721

Persons .720

Tax returns .762 By any measurement , these differences in apparent inequality are huge Moving upward , the Me /Ave could never exceed 1 .00 practically speaking it is seldom much over .900 . In the downward direction , anything...