The Conservative Cat

These days, it's not too hard to find somebody talking about how the rich are getting richer and the poor are getting poorer. This economic fact is easily demonstrated by the following graph, computed from government income inequality data.

This graph shows the median income for each fifth of the population. You can see the lower four quintiles making a more or less flat crawl along the bottom while the upper quintile's income shoots for the stars. (This is an inflation-adjusted graph, by the way. If you don't adjust for inflation, you get a very different graph.)

The problem with that graph is that it doesn't give an accurate picture. A 10% rise for the rich is going to look bigger than a 10% rise for the poor. So, let's take the same data, and express it as a percent of each quintile's income using 1988 as the base year.

Here it looks like the rich were getting the short end of the stick until right about the time Clinton took office. (Apparently, all those visits to the Lincoln Bedroom really paid off for people wealthy enough to afford them.)

So which graph gives us a more accurate picture of how the rich and the poor have fared over the years? The answer is that both graphs are worthless! Consider the following table (based on data from this page), which shows median income in constant dollars for the three lowest age groups.

As you can see, the median income rises with age. This means that for most people, as they get older, they're going to be floating up through the quintiles. A 20-year-old in 1984 making the median income for the 15-24 group is in the 2nd quintile; 12 years later (in 1996), a 32-year-old making the median income is in the 3rd quintile.

The truth is that it would take a lot of work and years of study to determine exactly what's happening to the rich and the poor, and most people don't have the resources to do that. Until they do, look for a lot of quintile graphs backed by appeals for redistribution of wealth.

Respectfully submitted

Ferdinand T. Cat