Visit: HYPERLINK \"http://www.census.gov/hhes/www/income/data/historical/househo

Question

Visit: HYPERLINK "http://www.census.gov/hhes/www/income/data/historical/household/index.html" U.S. Census Bureau > Income > Households
Go to the above website, scroll down to Table H2 and select "All Races." Calculate the percentage change in the Shares of Household Income of Quintiles between 1968 and 2008. Notice the dates are in reverse chronological order. Why do you think it has changed in the manner it has? Feel free to visit the main Census page at HYPERLINK "http://www.census.gov/" http://www.census.gov/ and click on Income under People for other interesting facts.

Explanation / Answer

%age change..............88.4%....-19%...-22.5%....-16.4%....-4.9%....17.4%...31.9%

The change has happened because over 40 years, post 1970s increase in inequality has been caused by a widening gap between the middle class and top earners, rather than between the poor and middle class. The disparity becomes more extreme the further one goes up in the income distribution. A 2011 study by the CBO found that the top earning 1 percent of households gained about 275% after federal taxes and income transfers over a period between 1979 and 2007.

Year Number (thousands) Shares of aggregate income Lowest fifth Second fifth Third fifth Fourth fifth Highest fifth Top 5 percent 1968 62,214 4.2 11.1 17.6 24.5 42.6 16.3 2008 1,17,181 3.4 8.6 14.7 23.3 50.0 21.5

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