Some Stats About the Growing Income Gap

We often hear talk of the growing income gap, but do you really understand what it means? Stanford University recently released a study that presents some startling statistics about the growing gap.

Following World War II, the income gap between the wealthy and the middle class shrunk considerably and remained relatively stable. The growing economy provided opportunities for the middle class to live comfortably, and the country’s wealthy saw their incomes grow at a similar rate to those of the middle class. However, by the 1980’s, the income growth rate began to diverge.

Over the past 30 years, there has been a trend of middle class areas shrinking while wealthy and poor areas are growing. In 2007, 44% of American families lived in middle- income neighborhoods. Compare that to the 65% of American families that lived in middle- income neighborhoods in 1970.

There have also been changes in wages over the past 30 years. According to the Congressional Budget Office, the income of the top 1% of earning households grew 275% from 1979 to 2007. The income of other American households grew just 62%.  Census Bureau data found that since 1980, 5% of income has migrated from the middle class to the affluent. This means that the 5,934 richest households in America saw an increase of $650 billion in income, or about $109 million per home.

Census data also found that the number of Americans living in poverty is growing and at its highest level in the 36 years since the statistic has been tracked. 6.3% of Americans live below the poverty line. For a family of four, that would mean living off an income of only $11,000!

This research really presents the growing income gap in real terms. For more information on these statistics, click here. Do any of these numbers surprise you? Have you felt the strains of the growing income gap?