NCPA - National Center for Policy Analysis

High Income Households aren't Rich

May 5, 2003

Comparisons of families or households in various income quintiles (fifths) rarely say how much money they make and how many people in these different brackets actually work. Families and households differ substantially in size -- and where more people are making money, they usually make more.

  • While there are more than 19 million people working in households with incomes in the top 20 percent, fewer than 8 million people work in households in the bottom 20 percent.
  • There are more people working fulltime in the top 5 percent of households than in the bottom 20 percent.
  • Among households in the bottom 20 percent, more than 13 million people do not work at all and fewer than 8 million are full or part time workers.
  • More than 4 million families in the bottom fifth live on property income and nearly 6 million live on various forms of retirement income, including Social Security.

Studies that follow the same individuals over time have found that those in the top 20 percent are mostly those who were in the bottom 20 percent at different stages of their lives.

  • High-income people typically have reached their peak earning years in middle age -- in 2001, it took a little less than $85,000 to be in the top 20 percent -- for a whole household!
  • To reach the top 5 percent, you need an income of about $150,000 for a whole household -- which can be a middle-aged couple who have worked in middle-class jobs over a period of decades.

Despite the fact that the bottom 20 percent get a smaller share than in times past, their real income has gone up by thousands of dollars. And people in that bottom 20 percent in the past have also moved up into higher brackets.

Source: Thomas Sowell (Hoover Institution), "Work pays!", May 2, 2003.


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