What about the top 1/100th of 1 percent?

The top 10 percent of the American population gets nearly half of the nation’s income.   That’s very unequal.  What the chart above shows is that income is just as unequal within the top 10 percent, the top 1 percent and even the top 1/10th of 1 percent.  Each rectangle represents a segment of the U.S. population, and each human figure represents 1/10,000th of the population (1/100th of 1 percent).  It shows that

• The top 10 percent of income earners, whose incomes all exceed $109,062 a year, get 48.2 percent of U.S. income.
• The top 1 percent of income earners, whose incomes all exceed $368,238 a year, get 20.9 percent of U.S. income (which is about two-fifths of the income of the top 10 percent).
• The top 1/10th of 1 percent of income earners, whose incomes all exceed $1.69 million a year, get 10.3 percent of U.S. income (which is roughly half of the income of the top 1 percent).
• The top 1/100th of 1 percent of income earners, whose incomes all exceed $9.14 million a year, get 5 percent of U.S. income (which is roughly half of the income of the top 1/10th of 1 percent.)

Most people aren’t aware of this.  Below is a bar chart on the distribution of wealth in the United States, which is even more unequal that distribution of income.  The top bar is the actual distribution of wealth in the United States, the middle bar is what the average American thinks it is, and the bottom bar is what the average American would like it to be.

The bar chart is based on a poll by Michael A. Norton, a psychologist at Harvard Business School, and Dan Ariely, a behavioral economist at Duke University.   Americans’ ideal distribution approximates the actual distribution of wealth in Sweden, where the top 20 percent own 35 percent of the nation’s wealth.

Norton and Ariely showed people three unlabeled pie charts, one showing completely equal distribution of income among the five income groups, one showing the Swedish distribution and one showing the U.S. distribution.  Forty-seven percent preferred the Swedish distribution, 43 percent preferred absolute equality and only 10 percent thought the actual U.S. distribution was best.  There was no difference between Democrats and Republicans on this.

Click on Why income distribution can’t be crowd-sourced for an article in Slate magazine giving more information on Norton’s and Ariely’s research.

Click on How to Think About Misconceptions Regarding Wealth Distribution in the United States for a justification of the U.S. inequality by Rehan Salam in National Review Online.

Click on Dan Ariely for his web log.

Rehan Salam wrote that even if the United States has greater income inequality than Sweden, this wouldn’t be bad if the majority of Americans are able to buy more stuff than the majority of Swedes. But in fact, the people in the more equal nations are better off in a lot of ways.

As for myself, I don’t have a target for distribution of income.  I do see a connection between the worsening economic condition of the majority of Americans, and the enormous incomes of crooked financiers, executives of failing corporations, such as the outgoing CEO of Gannett, and others who milk the system without creating anything of value.

But I don’t envy or resent anyone based on their income, or see anything wrong with someone being richly rewarded for achievements.  I think many Americans feel the same way.  I don’t think it is at all paradoxical that so many of the Occupy Wall Street protesters admire the late Steve Jobs.

Hat tip to The Big Picture for the top chart.

Tags: Income Distribution, Income equality, Public opinion polls