Weekend Diversion: Never Give a Physicist Your Data!

“Everything starts somewhere, although many physicists disagree.” –Terry Pratchett

With a high unemployment rate and many people having stopped looking for work, it’s pretty hard to live in the United States and not be aware of the struggles many people are facing. Here’s a song by Loudon Wainwright III to set the tone,

The Home Stretch.
Although many people have their theories, it’s worth asking just what the income disparity is in America. Thankfully, Catherine Rampell’s NY Times article earlier this week came loaded with data from Rachel Johnson of the Tax Policy Center. Specifically, they showed this graph.

As you can see, it’s really a very, very small percentage of people who are making money hand-over-fist, especially considering that the last three data points are the 99th, 99.5th, and 99.9th percentiles of Americans.

But they also included the raw data used to generate this graph, and I thought it’d be fun to do a little analysis and see what else we can learn about income in the United States.

So I decided not to look just at the dollar amounts.

We can look at what percent of Americans control what percent of the total US income. And here are some interesting facts:

  • The bottom 50% of Americans receive just over 14% of the total US income.
  • That’s less than the top 0.5% of Americans, who receive over 15% of total US income.
  • It’s worst at the lowest levels: the lowest 20% of Americans receive under 3% of the US income.
  • If you split income in half, the bottom 87% of Americans receive half, while the top 13% receive the other half.
  • And if you split it into thirds, the bottom 75% receive one third, the next 21% receive one third, and the top 4% receive the other third.

We can also break this up by percentage. Here’s a pie chart showing what percentage of US income is received by the entire US population, in 5% increments.

The largest pie slice — the top 5% — receives as much income as about the first 16 pie slices, or the bottom 80% of Americans.

Now, I don’t claim to know what a fair, sustainable, equitable income distribution looks like, or what the fairest system (i.e., tax code) is to obtain it, but it’s also worth pointing out that the top tax rate — 35% — begins at income over $373,650.

This hits someone in the 98th percentile (making less than half a million dollars) the same as it hits someone in the 99.99th percentile (making around ten million dollars). Food for thought, at any rate. Have a great weekend, and hope you enjoyed the song and the pictures!