Welcome to the Top 20% US household incomes

Share of Income by Percentage of Whole

On a percent-of-the-whole basis, here’s how all that income breaks down. Looks pretty even–until you remember that the top 5 bands are all in the top half. The blue band is the bottom half.

Did you and your spouse each earn 48,500k last year? Or did you, as the sole bread-winner, make 97k? Welcome to the top 20% of US household incomes!

Yes folks, that’s what it takes to be part of one of the most exclusive clubs in the world in the wealthiest countries in the world. This is how the numbers stacked up in 2006 according to the US Census.

Top 1% – $365k
Top 5% – $174k
Top 20% – $97k
Top 40% – $60k
Top 50% – $48k
Lowest 20% – $20k

Each number is the lower limit of the quintile. Thus, each quintile mean (average) is more but never more than the next lower limit.

Also, note this number is for *household* income. As you can guess, married couples are disproportionately represented in the upper two quintiles as most are dual-earner households. That is, if you are like 70% of American households. The combined amount is your household income. Kudos to the minorities that can get here with just one income. This is a time when it’s great indeed to be a minority.

If you are sadly overly competitive and want to compare your salary with the rest of the US, here is that same chart if you were to divide the household income by each wage-earner.

Top 1% – $182.5k
Top 5% – $87k
Top 20% – $48.5k
Top 40% – $30k
Top 50% – $24k

Other Members of the Group

As stated before, this is an exclusive group that tends to have specific requirements such as the following:

  • You are pale. 87.93% of all households in the top 5% were headed by a whitey, even though this was roughly 75.1% of all persons in 2000.
  • You are male. A typical male earns $33.5k, while a females earns $19.7k

What does being male and pale have to do with income? Clearly, a lot. You have made the decision to endow yourself with that society wishes to highly compensate. Specifically, you decided early on to have a Y chromosome and not be tainted with overabundant amounts of melanin. Such decisions are a sign of your continued future success.

What about education? An education erases all inequalities!

Sorry high school drop-outs like Dave Thomas, Peter Jennings, and Whoopie Goldberg, but this appears to be true. The more educated you are, the higher the income. The median individual income of a male high school drop-out was $19k, while a male with a master’s degree came home with $61.7k.

And good news ladies — you could boost your salaries to make 65.8% of your male counterpart’s income with the same degree! Spend as much time and money on a master’s degree, but only get 2/3 the return on investment.

But let’s be positive. This is clearly better than making 59.1% like those no high school diploma gals. Besides, getting an education, a high school one at that, isn’t the way to fame and fortune. Just ask Paris Hilton, Lindsay Lohan, Britney Spears, and Jessica Simpson.

Fine. Rich white men rule the nation. But they also pay the most taxes.

The wealthiest 1% earn 19% of total income but pay 37% of all taxes. You know, the family next door amassing 365k/year.

In fact, the top 50% of households pay 96.9% of all taxes. That means the bottom half of households, those making less than 48k or 24k individually for dual-earners are living off the hard work of everyone else. Bastards. I don’t care if you are working full time making minimum wage at McDonalds with no vacation and making $12,168/year. Get another job, work 80 hours/week, every week of the year and make $24k like everyone else. It is your fault that you are lazy, uneducated, not white and not male.

Should we feel sorry for the top percentiles?

In the last wealth survey in 1998, the richest 1 percent of households owned 38 percent of all wealth. These are the same poor bastards paying 37% of all taxes!

Ah, wealth. Also known as net worth, you can calculate this by taking your assets (real estate, savings, investments, life insurance) and subtracting your debt (mortgage, loans). The top 5 percent of wage-earners owned more than half of all wealth. The top 20 percent owns over 80 percent of all wealth.

Why did the top percentiles get so much wealth? Wealth (typically) begets wealth. If you were given 1 million dollars tomorrow and simply placed it in a CD, you would live as one of the top 40% of households on interest alone (assuming a 5.5% interest rate). Granted, inflation would decrease the value of your original million over time, but you get the point. It’s a lost easier to grow a million dollars than $10k especially over time (the power of compound interest). This is especially true if you are a silver spoon with old money from your hard working white, male ancestors (who owned slaves).

Enough Bitching. Any ideas?

One more gripe — if you are white and male you tend to be wealthier than those who do not sure your same gumption (to be white and male).

Ok, I like this one.

I would model [a wealth tax system] after the Swiss system…a progressive tax. In the United States, the first $250,000 of wealth would be exempt from the tax. That would exclude 80 percent of all families. The tax would increase at increments, starting out at .2 percent from about $250,000 to $500,000. It would not be a very severe tax. In fact, the loading charges on most mutual funds are typically of the order of 1 or 2 percent. It could raise about $60 billion annually. Eighty percent of families would pay nothing, and 95 percent of families would pay less than $1,000. It would really only affect very rich families.

$60 billion a year! That could fund a war for over 7 months!

29 thoughts on “Welcome to the Top 20% US household incomes

  1. In response to your post, I have to ask, over the course of history, is not the split of wealth more than it has been in the past? In short, how do the numbers you pose compare to the 1850s, 1900s, 1950s?

  2. The *wealth* divide has only increased. Some pundits will say that the salary/income have not, and I have researched conflicting data, but without hesitation the wealth divide is at a high point compared to the past 100 years.

    I haven’t read anything about the 1850’s before slavery was abolished, but I bought a book called the Wealth Divide that might shed some historical data on the matter.

    If someone wants to argue the facts of the existence of the wealth divide, they should present better ones. However, if you can still have an argument without arguing facts — argue ethical ones of whether or not this divide is a good/bad deal. My concern is the social unrest such wealth inequality can cause. If anything, wealth equality is an investment in social stability (read: keeps the masses from revolting and making your wealth worthless).

    Seeing how so few people know the factual, publically available stats I have summarized in this email (well, my CPA knew them and was utterly surprised when I answered them correctly) I wonder if there is some type of conspiracy of keeping this growing wealth divide hush-hush. In 1998 the top 20% owed 83% of all wealth!

    Regardless, if you are in the top 20%, stop your bitching and start counting your blessings. You will be much happier if you do.

    http://multinationalmonitor.org/mm2003/03may/may03interviewswolff.html

    MM: What have been the trends of wealth inequality over the last 25 years?
    Wolff: We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976. Prior to that, there was a protracted period when wealth inequality fell in this country, going back almost to 1929. So you have this fairly continuous downward trend from 1929, which of course was the peak of the stock market before it crashed, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s. Income inequality has also risen. Most people date this rise to the early 1970s, but it hasn’t gone up nearly as dramatically as wealth inequality.

    MM: What portion of the wealth is owned by the upper groups?
    Wolff: The top 5 percent own more than half of all wealth. In 1998, they owned 59 percent of all wealth. Or to put it another way, the top 5 percent had more wealth than the remaining 95 percent of the population, collectively. The top 20 percent owns over 80 percent of all wealth. In 1998, it owned 83 percent of all wealth. This is a very concentrated distribution.

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  5. You are an idiot. Do you really think that people should be able to just sit on *** and do nothing. Get off your ***and get educated. Why should be people with ambition take care of those with none. Granted I do believe that there are those with great wealth that have had more advantages than those of us who work our butts off but not the people in the income ranges you are talking about, such as the 5% category. My husband and I are now working 3 jobs. We work our full time jobs and then mow grass just to put our kids through college. I wonder how many in your generation know what real work is. As for the white male advantage, that is a load crap! Those tables turned some time back. If someone of color wants the job they now have the advantage. If someone of color wants an education they also have more an advantage. As far as I am concerned there is less motivation for those in the top 25% to keep working so hard since most of it goes to hold up the bottom 75% who are too lazy and too ungrateful. They should take advantage of the free public education offered to them, realize that it is cheaper to take birth control than to have more and more babies, realize that having a man can’t take priority over getting educated first. Maybe we need a study that shows the level of ambition and work ethic of the top 20% verses the bottom 80%. I do agree that all people should have a one time chance to become educated. I know people who go to college to keep the welfare check coming in and they go free. I went to college and paid for my twins daycare at the same time. We had one income at the time. We received no money to help me get through school. My husband delivered Soda Pop. I do believe that we as a country should give people a chance at getting an education but only one shot. You fail and you are finished. You should have to maintain a 2.0 to get assistance and you should have to clean up parks or do something for everything free that you get from the government.

  6. Dustin, You have two things here: your experience, and a wealth of data and statistics. You clearly have selected to trust your own sagacious wisdom. That wisdom you have must be hard-earned. If only everyone else would work as hard for it as you have.

    I’m not sure why you are of the opinion that hard work = money? Do you have a real world example of this? For everyone you provide, I will provide you “my (white) daddy gave it to me” story. Hard work may be part of the American work ethic, but it doesn’t equal success and wealth as often as you would like to suggest. Especially if you are not white. Or Male.

    As for why some may lack/have more ambition: look up “learned helplessness.”

    As for “someone of color now having the advantage” God forbid if after hundred of years of having the benefits of being white, those same white people counter balance the playing field a bit. Now, the stats don’t suggest this advantage exists, but whatever. Again, back to your omnipotent experience. We should all learn from it.

    I’m not suggesting that poor people are not lazy. Rather, I’m saying I know plenty of wealthy ones that are lazy enough for two people, rich or poor. Which lead me to investigate these numbers. And I found that when you look at data, you find this interesting pattern: wealth is attracted to males and whites OF EQUAL AMBITION in terms of education achieved. Interesting.

    I agree that a “free” education should be tied to community service. More specifically, I think everyone should be required to give community service as part of the grade school and high school experience unless they can show they are otherwise gainfully employed. White, black, rich, poor — they should all help the community as part of their education.

    Tell me, how much community service did you give for your “free” grade school and high school education? Or really, anything “free” that you got from the government (roads). If you ever made less than $50k as a household, you have been living tax free. So, think back to when you were 18, or 19 (legally independent) and effectively not paying taxes. Tell us, what have you done for your community lately?

  7. I don’t see that the income here is divided into salary or asset sales. Many, Many older people have sold their homes and assets in retirement, these monies are included in these figures as far as I can tell. Events that occur once or twice in a life time, if counted as something that WOULD occur over and over… certainly distort the financial picture. When the income averaging on taxes was removed, it allowed serious distortion in these types of figures. Figures and lie… and Liars can figure.

  8. The information is based on the information from the Census and the Department of Labor. So, I’m going to go out on a limb here and say it is just salary and wage we are considering, not other sources of income — rental property, investments, asset sales.

  9. Excuse me there are plenty of people that work a lot harder than that. They also went to school, work around the clock, mow their grass, make their own lunches, fix their own house up, and are still making middle income!!! We aren’t lazy! You are just a bit ignorant and over blessed. Not everyone figures out what they want to do for the rest of their lives before they reach 25 and they change their careers. Neverless we work very hard!!! Why should we and our children be punished????!!! I am white not that it should make any difference!

  10. How interesting. Throw a few cold statistics out there and see how the crowd responds. Ok, I did not come from money. No silver spoon in my mouth. My father was lucky to get a bowl of beans with one tortilla for a daily meal. He put his high school education on hold to fight in WWII. He put three sons through college. All this without any handouts. Now, according to those cold hard numbers, I am rich. Go figure, I dont feel rich, in fact I am in the process of putting 3 of my own through college. OUCH, it is expensive. I agree with Dustin. Too many freeloaders out there, people that feel we owe them something. Now big brothers says I make too much, lets redistribute the wealth. Fine, take the money, but remember, it is coming from hard working families too. It irks me to see government given handouts without condition. We need to provide jobs and job education: what to train for, how to keep a job, etc. You would be surprised how few people have these particular skills. Also, a little education on how to live within your means is in order. Check this website out:

    http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0802/document/ec021108.pdf

    Have a nice day.

  11. Great link! Thanks for sharing.

    Kudos to your father. Similiar to my own story — parents are immigrants who came to the US due political amnesty. Had $200US (inflation adjusted) on them when they arrived. Put two kids through college (thanks largely to a scholarship from part genetics, part gumption, part social programs).

    I’m all for education. However, that is a handout without condition, isn’t it?

  12. Equal opportunity for all!* Fair tax ftw.

    *Opportunity gained from family members and friends not measured under this system, as is morally sound.

  13. I find your post interesting and I enjoyed reading it. Thank You for the work you did to collect this data. You post seems to have invoked some strong negative emotions from others. I will attempt to make my point in a more friendly manner.

    I detected an undercurrent of contempt for those working individuals that conducted themselves in a manner to reach the top 20% that I truly do not understand. Myself and my best friend from my childhood have both reached that 20% for our respective families and are now enjoying the rewards that come with a life well thought out. Both of us had our own challenges growing up which we were able to overcome. We have achieved success coming from very humble backgrounds after years of paying for higher education and additional years of hard work in our respective chosen fields. We are both what I consider American success stories. We are now able to provide our children and wives with a very comfortable life and they enjoy a lifestyle that was not available to us growing up. My point is as follows: none of this happened by accident, we were able to achieve this only because our families instilled in us a good old fashioned work ethic which both of us used as we grew up and entered the work force. Everything we have was obtained through hard work and careful planning. This lifestyle, my friend, is available to anyone within the United States who has the ambition to reach out and attempt to obtain it.

    In your post you also wrote about the progressive tax system that our country currently employs. You pointed out the the top 50% of wage earners absorb 97% of the tax burden. That is unfair. The bottem 50% are recieving services paid for by someone else. If an individual pays nothing for a service over time they are conditioned to believe that that service is worthless and not worth paying for.

    In closing I feel I need to to end with my favorite quote from our 16th president, it goes as follows:

  14. You cannot bring about prosperity by discouraging thrift. You cannot strengthen the weak by weakening the strong. You cannot further the brotherhood of man by encouraging class hatred. You cannot help the poor be destroying the rich. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by taking away a person’s initiative and independence. You cannot help people permanently by doing for them what they could and should be doing for themselves.

    Abraham Lincoln, 1861

    These words written almost 150 years ago still ring true today. Elements exist within our society that allow any individual the ability to achieve financial success.

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  16. Since 40% of United States households get a government check every month (I personally do not), should those folks have any wealth? I’m curious how you would justify those who live off the rest of us deserve to be wealthy?

  17. Now to be in the top 1% of income receivers you need something like $450,000 or more. The top 1% now get about 25% of all income received.

  18. Wow, really interesting ruminations! May I offer an alternative view? You state that females with a Masters Degree earn less than males. You do not give any information about what degree these people are pursuing. For example, Harvard recently held a celebration for its first female law school graduates of 50 years ago (http://www.news.harvard.edu/gazette/2003/05.08/09-hls.html ). By contrast John Adams went to Harvard law school more than 200 years ago. You should not throw females with a masters desgree in education in the same statistical pool as males with MBA’s. The data shows that males have more years of experience in engineering than females do so it is no surprise male engineers are paid more. See http://www.nsf.gov/statistics/issuebrf/sib99352.htm . There are other distorting statistics in your ruminations but the dialogue is both stimulating and helpful.
    A white male in the top 1% whose father was an Italian immigrant

  19. The proposed FAIR TAX includes:

    1.) “Prebates” sent at the start of the month equal to the amount of the proposed FAIR TAX that would be spent up to the poverty level to each houehold,

    2.) Intrinsic 23/77 = 29.87%,

    (Note: taxpayer in the extrinsic 25% federal income tax bracket is intrinsically paying 25/75 = 33.33% now, or more correctly (25 +7.65 +7.65)/75 = 40.3/75 = 53.73%)

    Extrinsic 23%, federal tax on all new items purchased by citizens, visitors, illegal immigrants, government instituions, private businesses, formerly tax exempt institutions, etc.

    3.) Abolishment of all, all, all (Did I type all?) loopholes, exemptions, deductions for every tax entity because all other federal taxes would be abolished. Except for the proposed “Prebate” described in item 1.) above.

    4.) Used items would not be federally taxed.

    5.) Could be implemented by State taxing authorities.

    6.) Less points of collection (new item vendors) for increased probability of compliance.

    7.) Federal tax free savings, investments, estates, etc.

    8.) The unleashing of the brain power of those who figure how to evade (legal),
    not avoid (illegal), the federal taxes to accomplishments in engineering, health improvements, useful inventions, etc.

    9.) The lessening of lobby groups’ influence which tends to stifle advances in many fields instead of continuing profit models which are economically beneficial for relatively small percentages of the population.

    10.) Abolishment of the progressive income tax which was promoted by a now dead white man, Karl Marx, to DESTROY countries such as ours.

    http://www.fairtax.org

    • LOL yeah, anyway what is amazing is that the people here can’t take a joke.

      Clearly this piece is written with a bias and is very unprofessional. Needless to say it’ a blog/ rant. However, there is some truth regarding his racy comments. Statistics wont prove that to you. Experience does. If you are a non-white male in a white collar profession, YOU WILL EARN LESS. Equality does not exist in private enterprises where most of the money is being made. An ugly truth. Some exceptions obviously, but generally in most cases no.

      Should the top percent support the bottom 50%? Absolutely yes. Don’t have to go into details, but typically a country who does not support their own falters. Moreover, they can afford to. On average, a single person can live off of 40K a year (roughly 30k after taxes). A person making 60K(roughly 42K), 200K(roughly 122K) , 394K(roughly 240K) a year has money to blow. If you have a family of 3-4 you need 60K salary to “live”.

      You don’t offer a solution to the apparent lack of jobs in those professions that have those 6 figure salaries. A combined salary of 48K (33K roughly) belong to those who are struggling NOT living. Faults of capitalism. Someone will always be at the bottom. Those less unfortunate shouldn’t have to bear the burden of paying more taxes unless you lower the standard of living. Moreover you are incorrect or I should say misleading. Most of the taxes are paid by the MIDDLE CLASS not the 1% or 5%. More specifically, people earning between 29K-80K lose the most. The top 1-5% may lose 39% of their income, but they still walk away with well over 100K TAX FREE.

  20. All the while hunger has been replaced by obesity, material poverty is all but gone and the idea of unattainable luxury is largely banal.
    Hmm go figure.

  21. Wealth and income gaps are the highest in this country in the areas with the most progressive taxation in your world. Where? Oh urban America where high taxation reigns and disparity rules.

    The avg poverty stricken american lives in 950sq ft per family, owns 1.5 cars and is obese. The avg working Swiss lives in 775sq ft, owns half a car and somehow enjoys greater equality according to folks such as yourself.(I cite The UN Center for Human Centers and World Bank Housing Characteristics Report)

    All time worst disparities yet all the while the poorest idiot lives closer to Bill Gates than ever.
    A guy who revolutionized the world, eats at the same restaurants, doctors educated at the same schools, everyone has the same gadgets, teachers all taught by the same people.

    All time worst disparities yet in the 20’s guys like Rockefeller and Getty’s primary residences were complete NYC blocks.

    Sorry the earth be round and not flat.

  22. Extraordinary Demographic Shifts are becoming possible in certain business markets, which can catapult a household into the upper 20th percentile when following a disciplined self management structure, while increasing your personal share of wealth by maintaining a heathly growth market based lifestyle. Such as, managing purchasing and financial decision making based on the mean household acqusitions of the upper 20% inclusive of an increased emphasis on technology, luxury goods, upscale vacations, automotive and household. Healthy purchasing habits acquired through this practice, thus can, after a thorough investigation of their societal effectiveness, lead to an increase in business output, income, savings and investment.

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