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Illustrating Income Inequality, Part 1: Shared Prosperity Gives Way to Income Disparities

The economic fortunes of the wealthy and everyone else have diverged sharply in recent decades.  It wasn’t always this way; from the end of World War II into the 1970s, income growth was shared equally among all segments of the population.  But, as we’ll illustrate in three animated graphs, most of the income growth in recent decades has occurred at the very top.  Here’s the first:

After a period of shared prosperity in the early postwar decades, income disparities widened substantially beginning in the 1970s.  The Census Bureau provides data on the distribution of family cash income back to the late 1940s.  These data illustrate how a period of shared prosperity — during which incomes across the income scale rose at roughly the same rate — gave way to a period of widening inequality, during which incomes rose fastest at the top and slowest at the bottom.

For the reasons we discuss here, these Census data — while they provide statistics over a relatively long historical span — are not the best for assessing recent trends, especially at the top.  In our next post, we’ll show with more refined data how gains for the top earners have outpaced the rest since 1979.