Some Good News on Income Inequality

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NCPA Research Says Everyone's Income Continues to Grow

DALLAS (June 10, 2008) -The rich are getting richer, but so is everyone else, according to a study released today by the National Center for Policy Analysis.  The study concludes that all Americans are better off, even though the income gap between the highest-income and lowest-income American families has increased slightly.

"The rich are not rich at everyone else's expense," said David Henderson, the author of the study and editor of the Concise Encyclopedia of Economics.  "We're all getting richer."

The study found there is a lot of movement in and out of the income groups over time. "There is an enormous amount of mobility," Henderson said. "People who are high-income today aren't simply the same people who were high-income a decade ago."

Henderson said that comparing families at the top and bottom of the income ladder can be very misleading. The reason: high-income families tend to be older and married, with both spouses working. Low-income families tend to be young, single-parent households in which no one is working.

  • Less than one-third of families in the lowest income quintile (lowest fifth) have a head of household working full-time, compared with more than three-fourths of the families in the top quintile.
  • In 2006, 81.4 percent of families in the top income quintile had two or more people working, and only 2.2 percent had no one working.By contrast, only 12.6 percent of families in the bottom quintile had two or more people working and 39.2 percent had no one working.
  • Workers tend to start out with low incomes, increase their earnings with experience, and then have lower incomes late in their careers or retirement. For heads of households in the top income quintile, a substantial majority (58.5 percent) are in the peak earning years of 35-54, whereas in the lowest income quintile, only a third of heads of households are in this age group.

"America is still a land of opportunity," Henderson said. "Over time, a lot of people move to a higher income category."