Unexpectedly Intriguing!
June 7, 2007

Pretty close to the only way we haven't already looked at how the inflation-adjusted distribution of income by age group changed from 1995 to 2005 is to map out the distributions as percentiles of the number of income earners against their annual incomes.

By looking at how income shifted by age group over time by percentiles, we can adjust (somewhat) for the differences in the number of income earning individuals in each year by instead looking at what percentage of a given year's workforce earned a given annual income or less.

So that's what we did. Since our inflation-adjusted annual income range of \$0 to \$95,000 covers the bulk of individual income earners in the U.S. (see our back of the envelope calculation we used to confirm this below), we determined the percentiles for each age group in 1995 and 2005.

All that remains is to present the data, which we've opted to show using something like a comic book format! The panels on the left directly compares the same age group for both 1995 and 2005, while the panels on the right shows the changes that occurred when the 1995 age group became the 10-year older group in 2005!

Since the next age group up is the Age 75+ category, which is outside our age ranges of interest (as nearly all people within this category are solidly retired!), we've opted to not show the transition from 1995's Age 65-74 group to 2005's Age 75+ group in the final chart above.

Now tell us, do you get anywhere near this kind of analysis anywhere else?...

Back of the envelope calculation: For Age 25+ in 2005, a \$100,000 income in 2005 US dollars represents the 95th percentile [1][2] for individual income earners. After converting to 2004 US dollars to match our previous analysis, this 95th percentile income becomes \$97,656, just a bit above our \$95,000 figure, which means that we've captured the bulk of income-earning individuals in our ongoing analysis!

This assumes that this figure did not change substantially from 2004. We'll also note that we're examining the age ranges from 15 through 74, which is different from the Age 25+ group for whom the 95th percentile for personal income was obtained.

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