increasing inequality

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

In my never-ending effort to enlighten the bored students, I decided that I
needed a cool graph to illustrate the increases in income inequality in the
US during the last few decades. For some reason, I couldn't find any
excellent ones in my library, so I made my own.

Using US Census data on the incomes of "families", I drew two lines:

a) the lowest income of the top 5% of families divided by the top income of
the bottom 20% of families (from
http://www.census.gov/hhes/income/histinc/ie1.html),

b) the relative shares of total income received by the top 5% divided by
the share received by the bottom 20% of families, from
http://www.census.gov/hhes/income/histinc/h02.html.

It's interesting that series (a) steadily rises, indicating increased
inequality, from 1968 to 1998, whereas series (b) goes down during much of
the 1970s (being mostly flat), but then begins to rise in the 1980s. Why is
there this difference of results? I would guess changes in family structure
had this effect.

Also, series (b) shows an upward surge (a big leap!) in inequality at the
beginning of the Clinton administration (not due to the policies of Big
Bill himself). I'd never heard of this. What caused it? I would guess that
the Bush recession -- and the slow growth of employment during the recovery
period -- together with the wave of down-sizing during the early 1990s did
this. (There's also a steep rise of the share of profits in national income
-- a measure of the rate of surplus-value -- but it's largely due to higher
capacity utilization rates (faster turnover times of commodities).)

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Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine