Inequality Explained in One Simple Chart

Matt O’Brien in the Washington Post: NPR’s Quoctrung Bui “compares how much, in inflation-adjusted 2012 dollars, average households in the bottom 90 and top 1 percent have made each year … Inequality really was high during the 1920s. The bottom 90 didn’t make much progress then, while the top 1 rode the, well, roaring stock market to even higher highs.”

“But the New Deal set the stage for a new society … The result, as you can see above, was the creation of the American middle class. Between 1940 and 1970, the bottom 90 percent went from making, on average, $12,000 to $33,000. The top 1 percent, meanwhile, were stuck making “only” $300,000 this whole time.”

“The bottom 90 percent … haven’t done much better the last 30 years, even as the top 1 percent have created a second Gilded Age. The only exception was the late 1990s—highlighted in yellow—when a tight labor market gave workers the bargaining power that unions used to. But other than that, it’s been a tale of two economies. There’s the financial one, where the top 1 percent have tied their fortunes to the booming stock market, and the real one, where everyone else is struggling not to fall behind.”

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  • noice

    This is not exactly what I’d call a simple chart 🙂 the fact that the time dimension isn’t on an axis makes it rather convoluted.

    • Dan Carter

      Every point has a date. It’s about as simple as a chart showing three dimensions of data can be, but maybe that’s a high bar these days.

      • noice

        I understand the chart, but that doesn’t mean it’s simple. They could have easily simplified it e.g. by plotting only the year-to-year differences in each consecutive year as e.g. bars, with two groups side-by-side, and with time on the x axis. It would be more conventional and probably more boring, yes, but also more straightforward.

        Also, for a recent example of how there’s oh so many subtleties in presenting three data points on a graph, have a look at http://election.princeton.edu/2015/04/13/the-real-problem-with-that-chart/

  • pbrower2a

    It’s telling that in 2012 the average income of the non-rich was roughly the same as for the non-rich in 1966.

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