Income Gap: Dramatic Increase 1967-2010

The chart below vividly illustrates how the gap between the wealthy and the middle class has steadily grown since 1967.  Note the chart is in current dollars (1957 income reported in 1967 dollars and 2010 income reported in 2010 dollars).  And we all know that a dollar today won’t buy nearly as much as a dollar would in 1967, so the next chart reports in constant dollars.

Household-Inc-Current-Dollars

The chart below shows the mean (average) household income with all years reported in the equivalent of 2010 dollars.  This chart makes clear that the vast majority of Americans have hardly improved their economic status since 1967.  U.S. economic policies have NOT raised all boats – only the boats of the top 20% and the super rich (top 1%).  This helps us understand why the rising stock market is not an accurate indicator of the economic well-being of the majority.  Gains in productivity and profits have gone to the top earners (& dividend receivers), they have not been equitably distributed to the workers who actually produce more per hour.

Household-Inc-InflationAdj

Source:  Doug Short,  “U.S. Household Incomes: A 44-Year Perspective,:  dshort.com, Sept. 18, 2012.  Online at http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php

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