ABSTRACT
Major change took place in the U.S. economy in the last quarter of the twentieth century, and that change was fully evident by the late 1980s. It can most readily be charted in the data on the distribution of income. As we have emphasized, as compared with the pre-1930s era, the distribution of income and wealth was notably less unequal in the post-World War II era, and what’s more, over this era there was a slow and slight movement toward even greater equality. This direction of change toward greater equality, however, was reversed in the 1970s, and was clearly evident in the data by the late 1980s. (See Figures 3.1, 3.2, and 3.3.)
At the end of World War II, in 1946, the highest income families-the top 1 percent-obtained 13 percent of all income and the top 10 percent obtained 37 percent. By the mid-1970s, as we have pointed out, the share of the top 1 percent had fallen to about 9 percent, while the share of the entire top 10 percent had fallen to one-third of total income. A decade later, in 1986, these top groups had gained a great deal, with most of the gain going to that small group at the very top: the top 1 percent was getting 16 percent of all income, while the top 10 percent was obtaining 41 percent. The available data do not allow a precise comparison of other segments of the population with these elite groups. (See the Box II.1 for an explanation.) However, using the Census Bureau’s data, which understate the income of those at the top, the shift is striking: according to those data, in the mid-1970s the top 5 percent of families obtained 16 percent less income than did the bottom 40 percent of families, but by the end of the 1980s that top 5 percent was obtaining 18 percent more than the bottom 40 percent.
