America's Growing Income Gap by the Numbers
The nonpartisan Congressional Budget Office recently released a much-discussed study showing that over the past three decades the income of the highest-paid Americans has soared while the income of others has grown much more modestly. Here's a rundown of some statistics illustrating the growing income gap.
But first, some context. These numbers reflect income, not wealth. So a retiree who owns two houses and three cars may be far better off than someone with a higher annual income, two kids in college and a mortgage. It's worth noting that income includes investment income and capital gains.
Also, although a 2010 Organization for Economic Cooperation and Development study suggests that there is less income mobility in the United States than in many other developed countries, someone in the richest 1 percent this year may have been in an entirely different category 30 years ago. Take Bill Gates. In'79, Gates was 24, and Microsoft hadn't even incorporated. He was likely in the bottom tier of earners. More recently, of course, he has easily been in the top 1 percent. According to a 2007 Treasury Department study , "roughly half of taxpayers who began in the bottom income quintile in'96 moved up to a higher income group by 2005."
Third, though income growth has been unequally distributed, real income for all groups has grown over the past three decades.
In spite of those caveats, the gap between richest and poorest is far greater than it used to be.
All income numbers have been adjusted for inflation, and all household income data are adjusted for differences in household size . Please note that different subsections take different years as a baseline.
Overall income growth for the country as a whole
Wealth gap between young and old at record high
The wealth gap in the United States between the young and the old has expanded to the widest on record, stretched by a prolonged economic downturn that has eliminated jobs and left young adults burdened with mounting housing and college debts.
The typical U.S. household headed by a person 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to new Census data released Monday.
The wealth gap is now more than double what it was in 2005, and nearly five times the 10-to-1 disparity a quarter a century ago, adjusting for inflation.
The median net worth of households headed by someone 65 and older was $170,494. That is 42 percent more than in 1984, when the U.S. Census Bureau first began to measure wealth by age.
The median net worth for the younger age households was $3,662, down 69 percent from a quarter century ago, according to the analysis from the Pew Research Center.
Net worth included the value of a person's home, possessions and savings.
The 47-1 wealth gap between old and young Americas is said to be the highest ever, demographers note.
Overall, 37 percent of younger-age households have a net worth of zero or less, almost double the share in 1984. Among households headed by a person 65 or older, the percentage remained largely unchanged at 8 percent.
The reports also showed that wealth inequality is increasing within all age groups. The ailing economy and high unemployment rates have spared no one.
Wall Street Bonuses Expected to Shrink
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Wall Street bonuses are expected to shrink 20 to 30 percent in 2011 from a year ago, according to a compensation survey by Johnson Associates.
Released Tuesday, the findings reveal that even steeper declines are set for bond traders.
The quarterly survey is based on publicly disclosed data in regulatory filings and conversations with employees at investment banks, commercial banks and asset managed firms.
The average managing director will see a bonus of approximately $900,000 in 2011, down from $1.2 million in 2010.
Bond traders are likely to take home as much as 45 percent less in 2011 than they received in the previous year.
Johnson Associates said that small bonus increases may be possible for employees in commercial and retail banking, as well as for financial advisors, who work with high-net worth clients.
On the bright side, pay trends are expected to improve in 2012 because job cuts mean there will be fewer employees around to collect bonuses.
Unemployment Rate Drops to 9%
The unemployment rate dropped slightly to 9 percent in October, down from 9.1 percent in September, with 13.9 million Americans officially classified as unemployed, according to the U.S. Department of Labor.
Employers added 80,000 jobs in October, causing analysts to speculate that the jobs sector of the economy might be showing signs of a weak recovery.
Although the financial services sector of the economy has been in recovery from the recession for over two years, it received the bulk of the economic stimulus from Washington while the jobs sector and retail sector of the nation's economy did not receive much in the way of stimulus money. Moreover, the U.S. Congress has been unwilling to bail out the jobs or retail sectors as it did with the banks and Wall Street.
The economy has only about a quarter of the 8.8 million jobs that were shed during the recession. However, the economy also failed to create around 200,000 jobs monthly for first-time workers, many of whom were college graduates who are still unable to get their first job.
Those numbers show up in the labor-force participation rate.
Before the recession, 89 percent or more of all working-age Americans had a job and paycheck. That number has dropped.
Only 64.2 percent of all working-age Americans had either a part- or full-time job in October. That included people who are involuntarily working part-time either because their employer cut their hours, or because they were unable to find full-time work. Actually, the number of people involuntarily working part-time decreased by 374,000 to 8.9 million.
The unemployment rate for blacks declined slightly to 15.1 percent, while rates for other major groups remained stable at 8.8 percent for adult men, 8 percent for adult women, 24.1 percent for teens and 11.4 percent for Hispanics.
New Jobless Claims Fall to 397,000
New jobless claims dropped to 397,000 for the week ending Oct. 29, according to the U.S. Department of Labor.
It marked the first time in five weeks that initial jobless claims fell below the 400,000 mark, and it was a decrease of 9,000 initial filings from the previous week's 406,000.
The less volatile four-week moving average was 404,500, a decrease of 2,000 from the previous week's revised average of 406,500.
DOL officials said that the total number of people claiming benefits in all programs for the week ending Oct. 15, the latest week for which such data is available, was 6,781,960, an increase of 103,117 from the previous week.
October Global PMI Slackening; Recession possible
The Global manufacturing economy continued to deteriorate overall in October, with the European countries plunging into recession and affecting other economies.
In the latest Global Manufacturing Purchasing Managers Index (PMI) business survey by JPMorgan, the October PMI slightly reached 50.0 in October from a 49.8 in September.
The latest data puts it right on the threshold splitting growth from contraction. In manufacturing activity, a reading above 50 indicates expansion, a contraction is below 50.
Levels of production and new orders fell slightly over the month to 48.4 in October from 48.8 in September, the worst since May 2009, suggesting the continued economic uncertainty in the eurozone has seriously affected world trade activity.
A Markit survey on Wednesday showed the manufacturing PMI in the euro zone fell 47.1 in October from 48.5 in September. Data of individual countries showed manufacturing activity crashed to 27-month lows in Germany, Austria and Netherlands, a 28-month low in Italy and a 31-month nadir in Greece.
"Signs of weakness are becoming increasingly apparent in core nations, while the periphery remains mired in recession," Markit wrote in an accompanying statement.
The PMI is based on a survey of around 3,000 manufacturing firms in the eurozone.
U.S. factory orders rise 0.3 percent in September
United States factory orders rose in September, fueled by business investment that increased by its highest amount in six months.
September factory orders increased by $1.4 billion or 0.3 percent to $453.5 billion, marking the third consecutive month of gains, according to the U.S. Census Bureau. In August, new orders posted a 0.1 percent increase.
The report covered both durable and non-durable goods. Orders for durable goods, products expected to last at least three years, fell 0.6 percent, while orders for non-durable goods, which includes gasoline, chemicals, food, clothing and paper, rose by 1 percent.
Shipments also posted gains. September marked four consecutive months of gains with shipments increasing $1.3 billion or 0.3 percent to $452.7 billion. In August, shipments rose by 0.1 percent.
Manufacturers reported unfilled orders rose by 0.9 percent, the same rate as August.
Inventories also rose, increasing $0.6 billion or 0.1 percent to $601.3 billion, compared to a 0.3 percent increase in August.
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