Separate Realities: The Dream and the Iceberg - Scarecrow Press

56 Chapter 2
with children, occurred primarily because wives sharply increased their annual
hours of work. For example, wives between the ages of twenty-five and fifty-four
with children in the middle-income quintile increased their annual hours of
paid employment from 849 in 1979 to 1,327 in 2004. 51
The evidence concerning income trends supports the conclusion that there
has been a growing polarization of income in the United States. Using Census
Bureau information, the Economic Policy Institute (EPI) provides a useful way
of illustrating the extent of inequality concerning income redistribution in the
United States. The EPI reports the shares of aggregate (total) national income
received by U.S. families divided into five quintile groups, arrayed by income
levels from the lowest 20 percent to the highest 20 percent (all amounts in
2004 dollars).
Drawing upon EPI and Census Bureau data, figure 2.1 summarizes several
aspects of family income levels and redistribution trends in recent years. First,
it illustrates, using side-by-side comparisons, the shares of national income received
by families in each quintile group for 1974 and 2004. Second, the first
line at the bottom of the figure reports the percentage changes in family income
shares from 1974 to 2004 for each quintile group. Finally, the last line
at the bottom of the figure provides a summary of 2004 family income ranges
for each quintile. 52
During the 1974–2004 period, each quintile group experienced changes in
the percentage of aggregate income received, ranging from highly positive to
highly negative. The top 20 percent experienced an 18 percent increase in its
share of national income (from 40.6 percent in 1974 to 47.9 percent in 2004),
whereas the other four quintiles all experienced decreases in their shares of national
income. These ranged from a modest loss of 3 percent for the fourth
quintile (dropping from 24.1 percent to 23.0 percent) to a whopping 26 percent
loss for the bottom quintile (dropping from 5.7 to 4.0 percent). The
changes in income shares for these five groups reflect the reality that income
was redistributed over the 1974–2004 period in an upward direction.
The income ranges reported as the last line of figure 2.1 provide a context
for considering the impact of upward income redistribution. The income
range for the bottom quintile in 2004 included all families with incomes up
to $24,780 (in 2004 dollars). This means not only that families in this group
have the lowest incomes, but also that they will be most affected by income
losses because they have the fewest resources to begin with. Yet this group suffered
the greatest loss in income share during the 1974–2004 period. The income
ranges for the second quintile ($24,781 to $43,400), the middle quintile
($43,401 to $65,832), and the fourth quintile ($65,833 to $100,000)
provided these groups with greater cushions (compared with the bottom
quintile) to absorb income losses. Of course, the top quintile, with an income
range of $100,001 and up, needed no cushion; it increased its income share
by 18 percent.