Mind the gap

Posted: 29 May 2015 in Uncategorized
Tags: , , , , , ,

fredgraph-1

I’ve illustrated and discussed lots of different “gaps” on this blog: between productivity and wages, between the top 1 percent and everyone else, and so on. All of them point to growing inequality in the United States.

But here’s another one we should be concerned about: the growing gap between mean and median family income. As the Federal Reserve Bank of St. Louis explains,

The graph above shows real family income in the United States in constant (2013) dollars. The mean is the average across all families. The median identifies the family income in the middle of the sample for every year: half of incomes are higher, half are lower. We quickly learn three things from this graph: 1. Family income has been growing much more slowly since the 1970s. 2. There are several episodes of declining income, and they become increasingly long and deep. 3. Median and mean incomes are diverging.

fredgraph-2

The growing gap in family income can be mostly easily seen in the chart above, in which the mean is divided by the median. As is immediately evident, this ratio has steadily increased over many decades (and many presidential administrations, both Republican and Democrat), with a dramatic jump from 1992 to 1993 (the last year of Bush the Elder’s presidency).

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