Income distribution in America - Quintile breakdowns.

[panamaican]

It's common conversation to point to the shrinking ability of Americans to change income quintiles, compared to their parents. I've long hated this conversation because no one ever presents the actual quintiles. This is an important piece of the conversation because it provides some context for the rising difficulty in changing brackets. I've finally found a decent breakdown of how the quintiles have changed over the years.

In 2010 dollars:

The 1979 average difference between quintiles = $29,235
The 2010 average difference between quintiles = $53,750

Just on that alone, it's obvious that is should be harder to change quintiles now than before. Our quintiles have almost doubled in scale. That means the guy in the 3rd quintile has to essentially make 2x more money than his parents to change quintiles. He can actually make an entire 1979 quintiles' worth more money than his parents and never change 2010 quintiles. Even if we exclude the highest quintile, we find that the average difference between quintiles is still 33% larger in 2010 than in 1979. That should help us understand that the failure to change quintiles doesn't mean that today's generation isn't making significantly more money that they're parents. We are better off in terms of actual income, even if not in terms of changing quintiles (which doesn't really mean anything of value if the quintiles have changed as much as they have).

Furthermore:

The lowest quintile is now 40% larger than it used to be. (0-17,200) vs. (0-24,100).
The 2010 quintiles have cutoffs that are 40%, 26%, 25%, 35% and 78% higher than their 1979 counterparts respectively.

In total it shows that the average American is making much more money than previously and that the inability to change quintiles is reflective of the reality that more people are making higher salaries, requiring significantly larger jumps in income to change brackets. Characterizing the inability of modern Americans to change brackets as problematic without acknowledging the change in the scope of those brackets is a very disingenuous approach that leads individuals to feel that they've lost something that they haven't.

This isn't to challenge the reality that the top brackets have taken home a larger share of both pre- and post- tax income (especially the top 1%). Only that income quintile conversations don't make a lot of sense. So please don't take this as an attempt to ignore that stark reality.

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=458

 

[CableandThanos]

Pan

do you know or do you have any data on the amount of money the "rich" make in foreign markets or overseas? I have heard you talk about how you can't really get a good measure in the difference between the rich and non rich here in America because we don't have a good number on how much wealth comes from overseas. People act like every penny the rich have, is money that has been taken from other Americans. That all the money the rich have has all come from the limited "pot" of money here in America.

 

[Roaming East]

so inflation and wage stagnation has pushed the difference between the haves and have nots so far down the road that the difference between the too means everything is ok? you're insane.

 

[MarcoW]

In Canada at least you see that the rich get richer, the middle gets slightly more middle class, and the poor stay exactly as poor as before.

and this here shows you that...

the United States has the worst income disparity among G7 Countries.

 

[panamaican]

Pan

do you know or do you have any data on the amount of money the "rich" make in foreign markets or overseas? I have heard you talk about how you can't really get a good measure in the difference between the rich and non rich here in America because we don't have a good number on how much wealth comes from overseas. People act like every penny the rich have, is money that has been taken from other Americans. That all the money the rich have has all come from the limited "pot" of money here in America.

No, I haven't found a good source for that yet but I keep my eyes open.

 

[panamaican]

so inflation and wage stagnation has pushed the difference between the haves and have nots so far down the road that the difference between the too means everything is ok? you're insane.

And you're not reading if you think I said anything like that in my post.

 

[panamaican]

In Canada at least you see that the rich get richer, the middle gets slightly more middle class, and the poor stay exactly as poor as before.

and this here shows you that...

the United States has the worst income disparity among G7 Countries.

Right, the point is that we have a growing disparity because the overall income brackets have grown. The middle 20% of America is making much more money, across the spread, than they used to. So is the bottom 20% and the top 20%. Everyone is making more money and so the dollar value size of the quintiles has increased.

Countries with less income disparity means that the brackets are closer together. But that's a worthless bit of information without the actual brackets themselves. The point of presenting the American brackets between 1979 and 2010 is to show that we have more income disparity because we have more income everywhere. It's easy for everyone to be close together when $20,000 separates each quintile. It's much harder when the brackets are $50,000 apart.

You still have 20% of the population in each quintile so the reality is that today's 20% has a higher income than the same 20% from 30 years ago.

 

[MarcoW]

your saying that wages are higher and so its not as bad that its harder to change quintiles... no?
its a little hard to say this when the reality is that being in the bottom quintiles undoubtedly still sucks.

On my little chart it shows that in Canada in 1976 the poor made comparatively less, around 15,000 compared to 20,000...
but do you think it is really that much better that they now, 30+ years later, make 5000 extra dollars?

 

[MarcoW]

Right, the point is that we have a growing disparity because the overall income brackets have grown. The middle 20% of America is making much more money, across the spread, than they used to. So is the bottom 20% and the top 20%. Everyone is making more money and so the dollar value size of the quintiles has increased.

Countries with less income disparity means that the brackets are closer together. But that's a worthless bit of information without the actual brackets themselves. The point of presenting the American brackets between 1979 and 2010 is to show that we have more income disparity because we have more income everywhere. It's easy for everyone to be close together when $20,000 separates each quintile. It's much harder when the brackets are $50,000 apart.

You still have 20% of the population in each quintile so the reality is that today's 20% has a higher income than the same 20% from 30 years ago.

were your stats inflation adjusted? mine were not that they are better I am just curious.

it makes no sense that everyone can be making more money, if that was the case the value of money would be going way down.
The rich can't get richer while the poor and middle class get richer, that is virtually impossible, one end of the scale would push the other in the opposite direction.

 

[MadSquabbles500]

Even $30K difference in 1979 for each quintile is still a large gap. I thought it was more evenly distributed then.

But I guess it matters what the distribution within each quintile is. Is this calculated by taking the minimum in each quintile? How many people are on the upper levels or middle levels of each quintile? Or did they come up with that difference by take the mode (if I have my terms correct) of each?

 

[MadSquabbles500]

In total it shows that the average American is making much more money than previously and that the inability to change quintiles is reflective of the reality that more people are making higher salaries, requiring significantly larger jumps in income to change brackets. Characterizing the inability of modern Americans to change brackets as problematic without acknowledging the change in the scope of those brackets is a very disingenuous approach that leads individuals to feel that they've lost something that they haven't.

This isn't to challenge the reality that the top brackets have taken home a larger share of both pre- and post- tax income (especially the top 1%). Only that income quintile conversations don't make a lot of sense. So please don't take this as an attempt to ignore that stark reality.

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=458

People may be making more, but that money is worth less now isnt it?

 

[panamaican]

your saying that wages are higher and so its not as bad that its harder to change quintiles... no?
its a little hard to say this when the reality is that being in the bottom quintiles undoubtedly still sucks.

On my little chart it shows that in Canada in 1976 the poor made comparatively less, around 15,000 compared to 20,000...
but do you think it is really that much better that they now, 30+ years later, make 5000 extra dollars?

I'm saying that the ability to change quintiles doesn't tell us anything of value because the quintiles themselves have changed dramatically. And being in the bottom quintile doesn't automatically suck since you can be in today's bottom quintile with an income that would exceed the old value.

Which is more important? Making more money or being in the bottom quintile? I'd rather make more money, regardless of which quintile I'm in. I can spend the more money, the higher quintile classification has no value in my real life.

were your stats inflation adjusted? mine were not that they are better I am just curious.

it makes no sense that everyone can be making more money, if that was the case the value of money would be going way down.
The rich can't get richer while the poor and middle class get richer, that is virtually impossible, one end of the scale would push the other in the opposite direction.

The stats are inflation adjusted to 2010 values.

And yes, everyone can be making more money, rich and poor alike. The rich do not make their money solely from the American poor. That's a fallacy. The rich can make money from many different ventures and the poor can see their income increase simultaneously. To repeat an oft used phrase: It's not a zero-sum game. Everyone can get richer (although the rich are getting richer faster than the poor).

 

[panamaican]

People may be making more, but that money is worth less now isnt it?

It's inflation adjusted to 2010 dollars so I'd guess that opinion would turn on some other valuation.

 

[panamaican]

Even $30K difference in 1979 for each quintile is still a large gap. I thought it was more evenly distributed then.

But I guess it matters what the distribution within each quintile is. Is this calculated by taking the minimum in each quintile? How many people are on the upper levels or middle levels of each quintile? Or did they come up with that difference by take the mode (if I have my terms correct) of each?

It didn't get into the distributions within the quintiles, except for the top quintile so I don't know.

 

[HOLA]

The numbers the U.S. Census B gives out are different. http://www.census.gov/hhes/www/income/data/historical/household/index.html

The lowest Q is lower than it was in the 90's-just slightly above where it was in 1974, actually. Same for next Q, trending down recently. Top dogs are increasing exponentially.

 

[panamaican]

The numbers the U.S. Census B gives out are different. http://www.census.gov/hhes/www/income/data/historical/household/index.html

The lowest Q is lower than it was in the 90's-just slightly above where it was in 1974, actually. Same for next Q, trending down recently. Top dogs are increasing exponentially.

The numbers I referenced were drawn from the CBO.

 

[ProBoxingInsidr]

in my over simplified way of looking at things, i think it breaks down like this

in 2014 there are WAY more people that are looking for handouts, expect things to be given to them, are lazier, etc.

back in my day (cue old man music), most people i knew wanted to be rich, or at the very least wanted to be very successful. today people seem much more content to just get by.

i dont care who you are, if you want to make it in this country, you can make it.

 

[MarcoW]

The stats are inflation adjusted to 2010 values.

And yes, everyone can be making more money, rich and poor alike. The rich do not make their money solely from the American poor. That's a fallacy. The rich can make money from many different ventures and the poor can see their income increase simultaneously. To repeat an oft used phrase: It's not a zero-sum game. Everyone can get richer (although the rich are getting richer faster than the poor).

well, yeah they can take money from the poor and rich of other countries too.
but that just means that some other group of people somewhere else is being misused.

Regardless, just because we are all making more money doesn't mean the gap is less important. I mean its clearly better to make more, to have more to spend and put in the economy, but fair wages for fair work is more a moral principle than a principal that says "hey we make more, that's good, right poor people?"

 

[MarcoW]

in my over simplified way of looking at things, i think it breaks down like this

in 2014 there are WAY more people that are looking for handouts, expect things to be given to them, are lazier, etc.

back in my day (cue old man music), most people i knew wanted to be rich, or at the very least wanted to be very successful. today people seem much more content to just get by.

i dont care who you are, if you want to make it in this country, you can make it.

if you want to make it, you are smart enough to use the system, you have resources to help you make it, then you can undoubtedly make it.

I know about the realities of industry because my father was a high paid executive (made over 170k with bonuses) and he lost his job because of corporate downsizing. Now he has too much experience so nobody (4 years after the fact) will hire him.

A lot of time you can try as hard as you want and there is nothing you can do. It doesn't help that students are able to study whatever they want believing it will lead to jobs even if there is no jobs in the field and they aren't made aware of that fact.

I used my example just because it shows you that sometimes even someone with a crazy amount of resources, contacts and otherwise can still fail to make it due to being pigeonholed.

 

[CableandThanos]

well, yeah they can take money from the poor and rich of other countries too.
but that just means that some other group of people somewhere else is being misused.

Regardless, just because we are all making more money doesn't mean the gap is less important. I mean its clearly better to make more, to have more to spend and put in the economy, but fair wages for fair work is more a moral principle than a principal that says "hey we make more, that's good, right poor people?"

lol

So because someone makes some money from another country, they are taking money away from the poor people of that country?

How many times do you have to be told that it is not a zero sum game? Just because person A makes another $10, doesn't mean person B loses $10. There is not a "set amount of wealth in the world, and if a rich persons gains $10,000, that doesn't mean a poor person has to lose $10,000.

Imagine how much money is left out there. If there was a set amount then why can I or anyone else get a second job and make more income. IF I get a second job and make more money am I taking money from the poor? LOL.

Excuse me poor people, I am gonna work a second job, please take the money out of your bank account so that I can get paid.