NCPA - National Center for Policy Analysis

Income Inequality Rose Sharply

October 2, 2000

The U.S. Census Bureau says median household income has risen to its highest level ever, and the poverty rate has declined to its lowest level since 1979. But there has also been a sharp rise in income inequality during the Clinton years.

The fact is that since 1992, the share of total household income of the bottom 80 percent of households has fallen. Every income quintile (20 percent) now has a smaller slice of the income pie than it did then.

  • The bottom quintile -- those with incomes below $17,196 -- fell from 3.8 percent to 3.6 percent; the second quintile ($17,196 to $32,000) fell from 9.4 percent to 8.9 percent; the third quintile ($32,000 to $50,520) fell from 15.8 percent to 14.9 percent; and those in the fourth quintile ($50,520 to $79,375) fell from 24.2 percent to 23.2 percent.
  • By contrast, the top quintile's share of total income has risen from 46.9 percent in 1992 to 49.4 percent in 1999 -- more than during the comparable period under President Reagan.
  • The top 5 percent of households saw their income share rise even more, from 18.6 percent to 21.5 percent over the same period.
  • The 2.9 percent rise in the share of the latter group compares with a 2.4 percent rise between 1980 and 1987.

No group is worse off in absolute terms because the average real income of every quintile rose last year over 1998 and is well above the 1992 level. This means standards of living have risen even for those whose share of total income has fallen.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 2, 2000.


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