Average Income in 2006 up $60,000 for Top 1 Percent of Households, Just $430 for Bottom 90 Percent: Income Concentration at Highest Level Since 1928, New Analysis Shows — Center on Budget and Policy Priorities

Average Income in 2006 up $60,000 for Top 1 Percent of Households, Just $430 for Bottom 90 Percent: Income Concentration at Highest Level Since 1928, New Analysis Shows — Center on Budget and Policy Priorities

Average pre-tax incomes in 2006 jumped by about $60,000 (5.8 percent) for the top 1 percent of households, but just $430 (1.4 percent) for the bottom 90 percent, after adjusting for inflation, according to a new update in the groundbreaking series on income inequality by economists Thomas Piketty and Emmanuel Saez. Their analysis of newly released IRS data shows that in 2006, the shares of the nation’s income flowing to the top 1 percent and top 0.1 percent of households were higher than in any year since 1928.
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The new data show:

• 2006 marked the fourth straight year in which income gains at the top outpaced those among the rest of the population. Since 2002, the average inflation-adjusted income of the top 1 percent of households has risen 42 percent, whereas the average inflation-adjusted income of the bottom 90 percent of households has risen about 4.7 percent. (See Table 1.)
• As a result, the share of the nation’s income flowing to the top 1 percent has increased sharply, rising from 15.8 percent in 2002 to 20.0 percent in 2006. Not since 1928, just before the Great Depression, has the top 1 percent held such a large share of the nation’s income. (See Figure 1.) In 2000, at the peak of the 1990s boom, the top 1 percent received 19.3 percent of total income in the nation.[2]
• Income gains have been even more pronounced among those at the very top of the top 1 percent. The incomes of the top one-tenth of 1 percent (0.1 percent) of U.S. households have grown more rapidly than the incomes of the top 1 percent of households as a whole, rising by 58 percent, or $1.8 million per household, since 2002. The share of the nation’s income flowing to the top one-tenth of 1 percent increased from 6.5 percent in 2002 to 9.1 percent in 2006. This is the highest level since 1928.

>Table 1: Average Income Gains, Adjusted for Inflation, 2002-2006
	Dollar Increase	Percentage Increase
Bottom 90 percent	$1,446	4.6%
Next 9 percent	$14,496	10.0%
Top 1 percent	$321,132	41.8%
Top 0.1 percent	$1,809,824	57.6%
In 2006, the bottom 90 percent of households were those with incomes below about $105,000. The next 9 percent were those with incomes between $105,000 and about $368,000, and the top 0.1 percent were those with incomes above about $1,764,000.

The uneven distribution of economic gains in recent years continues a longer-term trend that began in the late 1970s. In the three decades following World War II (1946-1976), robust economic gains were shared widely, with the incomes of the bottom 90 percent actually increasing more rapidly, on average, than the incomes of the top 1 percent. But in the three decades since 1976, the incomes of the bottom 90 percent of households have risen only slightly, on average, while the incomes of the top 1 percent have soared.[3] (See Figure 2.)

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