NCPA - National Center for Policy Analysis

Measuring Income

May 22, 1996

People in the upper income brackets got there by working more, according to a new study by Kenneth Deavers of the Employment Policy Foundation.

Most of the growth in real income since 1970 has gone to families in the top 60 percent of household incomes, while income (exclusive of welfare benefits) for those in the bottom 40 percent has barely budged.

Here are some of the reasons:

  • In 1993, only about 15 percent of families earning less than $15,000 had a full-time, year-around worker in the household.
  • By contrast, more than 87 percent of families earning more than $50,000 did.

Income inequality has risen over the past two decades largely because more wealthy women work.

  • In 1993, 98 percent of families with incomes over $100,000 had two earners, according to the Congressional Budget Office.
  • Families with incomes over $50,000 have an average of 2.2 workers in the household.
  • Families with less than $15,000 in household income average less than one worker.
  • About 40 percent of families in the lowest fifth of income are now headed by a single woman -- compared to just three percent of top-quintile families.

Families in the "middle class" have gotten richer. Between 1970 and 1990, the share of families with real income of less than $35,000 declined about nine percent -- while those making more than $50,000 swelled more than 34 percent.

Those who stress that average income has fallen in the lowest quintile fail to note that since welfare is not counted as income, and there are fewer in those households who work, inequality is bound to increase.

Source: Perspective, "Class Warriors," Investor's Business Daily, March 22, 1996.


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