Average Income For The Bottom 90 Percent Of Americans Grew Just $59 In 40 Years

The top 10 percent of Americans have experienced rapid income growth over the last 40 years, but the bottom 90 percent haven’t been so lucky. In fact, average income rose just $59 from 1966 to 2011 for the bottom 90 percent once those incomes were adjusted for inflation.

That’s according to a new study of tax data from David Cay Johnston, who won a Pulitzer Prize for his writing about tax policy. While the bottom 90 percent’s incomes rose just $59, the top 10 percent fared much better, he found:

In 2011 the average AGI of the vast majority fell to $30,437 per taxpayer, its lowest level since 1966 when measured in 2011 dollars. The vast majority averaged a mere $59 more in 2011 than in 1966. For the top 10 percent, by the same measures, average income rose by $116,071 to $254,864, an increase of 84 percent over 1966.

The difference in those gains has reduced the share of income the bottom 90 percent holds as well. That segment held two-thirds of all household income in 1966 but just 51.8 percent in 2011, Cay Johnston found. Other studies have had similar results. One study found that pay for chief executives increased 127 times faster than worker pay over the last 30 years, and official data has shown worker wages stagnating since the 1970s. That has led to a sharp increase in American income inequality, which now rivals rates from countries like the Ivory Coast and Pakistan.


The biggest driver in that disparity, Cay Johnston wrote, was not that the rich were working harder, “but the shift of income from labor to capital and changes in federal income, gift, and estate tax rules.” Indeed, the estate tax has been eased over recent decades and federal income taxes have become more favorable to the wealthy thanks to breaks for investment income. A recent study, in fact, found that the capital gains tax cut, which benefits the wealthy but does virtually nothing for everyone else, was “by far” the biggest driver in the growth of American income inequality. (HT: Huffington Post)