June 13, 2007

We've been looking at how the distribution of income has shifted from 1995 to 2005 by age group, but until today, we haven't put the whole picture together for all U.S. income-earners in those years.

Our first chart is the result of adding up all the individuals in each of our working age groups (individuals aged 15-24, 25-34, 35-44, 45-54, 55-64 and 65-74) that we modeled for each \$100 interval from \$0 to \$95,000 in constant, inflation-adjusted, 2004 U.S. dollars:

This chart reveals that the number of the lowest income earning individuals (those earning anywhere from \$0 to \$15,300) in the U.S. has decreased in the period from 1995 to 2005. Meanwhile, we see that the number of income earners at all annual incomes above \$15,300 increased in raw numbers substantially, except at the very highest levels.

Our next chart shows the magnitude of the shift in the distribution from low to middle and higher incomes, as the percentage change in the number of income-earners at each annual income level:

In addition to confirming the large percentage reductions in the number of the lowest income earners (below \$15,300) that was clearly evident in the previous chart, we find that the number of income earners increased substantially at all income levels above \$15,300, with the greatest percentage gain from 1995 to 2005 being centered at \$66,200.

This is partly due to the relatively low numbers of higher income earners in 1995 - it doesn't take a large numerical gain to create a high percentage gain at the upper end of the income spectrum. (You can extract the numbers directly using our comparison tool!)

Our final chart represents the changes in the percentile distribution of our Age 15-74 income earners from 1995 to 2005. Here, the 100th percentile consists of everybody within our age groups who earned between \$0 and \$95,000 in inflation-adjusted 2004 U.S. dollars for both years:

This chart demonstrates that while all the percentile levels in 2005 are ahead of the equivalent 1995 levels, the greatest gains occurred at the lowest end of the income spectrum.

In other words, income inequality among individual working-age income-earners decreased from 1995 to 2005.

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