Income Distribution
Research suggests that in addition to the social consequences of economic inequality—such as crime, social exclusion, and despair—the gap between rich and poor has a detrimental effect on health. One indicator of economic inequality is income distribution, measured by the share of total income received by households, grouped by fifths of the population. Another measure of inequality is total wealth because it includes the dollar value of all household assets—cash, bank accounts, stocks, bonds, life insurance, houses, cars, pension rights—and excludes liabilities and debts. Wealth brings security and bestows social status and power. In turn, poverty begets hopelessness, stress and diminished ability to change personal, family, and social conditions.
• In King County, between 1979 and 2007, income has shifted from the four lower income groups to the highest income group.(figure 1) In 2007, the richest 20% of households received 48.9% of all income earned by King County households in that year. The poorest 20% earned only 3.5% of total income.
• King County households in the richest income group earned at least $34,800 in 1979 and $124,800 in 2007. The poorest income group earned at most $21,700 in 1979 and $29,400 in 2007 (data not shown).
• Nationally, between 1999 and 2007, calculated in 2007 dollars, the poorest fifth saw a 6% decrease in their family income, the low fifth a 3% decrease, and the remaining three fifths showed negligible change. At the same time, the very richest 5% saw a 2% decrease. In contrast, income had increased for all groups between 1979 and 1999 (data not shown).
• While local data are not available on household wealth, nationally wealth inequality has always been substantially greater than income inequality. As of 2004, the richest 5% of U.S. households held 59% of the nation’s private wealth and the top 1% of households held more than one-third of the wealth. Between 1983 and 2004, average household wealth increased by 78% for the top 1%. By comparison the bottom 40% experienced a 59% loss (data not shown).
• Median income is the income level that separates the top and bottom half of all households. Half of all incomes are below and half are above the median.
• The 2007 median household income was higher in King County than in either Washington State ($55,600) or the U.S. ($50,700) (data not shown).
• Data on median household income by region were not available for 2004 or 2007. In 1999, the highest and lowest regional median household incomes were in East Region ($71,100) and Seattle ($45,800), respectively. (figure 2)
• In 2007 for King County, African American households had a median income just over half (51%) of that earned by white households. (figure 3) Hispanic/Latino household income was just over two-thirds (67%) of white household income. Asian household income was 93% of that of white households. These patterns have been consistent since 2000.
• Due to small sample size, the pattern is unstable for American Indian/Alaska Natives, Native Hawaiian/ Other Pacific Islanders and Multiracial groups.
Data Source, Definitions, and Limitations
The income distribution in King County represents all household income for one year, divided into five groups, each with an equal number of households. Each fifth of households is arranged by increasing income, with each fifth earning a certain percentage of the total income. The income data estimate the number of households in various income ranges. “Income” consists of pre-tax wages, interest, rental income, and other personal receipts, including government cash transfers. These figures do not include other types of income such as capital gains, employer-paid health insurance, or in-kind government assistance such as food stamps. Most of the non-money income is received by the more affluent households. Furthermore, this indicator does not measure accumulated wealth such as property, savings, and other assets. Nor does it consider varying tax rates paid by the different income groups.
Data for 1979, 1989 and 1999 are from the 1980, 1990 and 2000 U.S. Censuses, respectively. For these data, the geographic boundaries of King County and the four subregions are defined by aggregating block groups. Data for 2002 through 2007 are from the American Community Survey. These survey data are from a sample and therefore are subject to error. At the time of publication the 2007 data were not available by region. Comparisons between ACS data and the decennial U.S. Census should be made with caution. See full explanation under “How to Understand the Data and Terms.”
National data on income growth inequality are from the U.S. Census Bureau, Historical Income Tables, Table H-3 http:// www.census.gov/hhes/www/income/histinc/h03AR.html. National data on wealth inequality are from an article by Edward N. Wolff: “Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze”, The Levy Economics Institute and New York University, June, 2007 http://www.levy.org/pubs/wp_502.pdf.
* Communities Count 2005 reported, in error, that the highest income group earned at least $104,000 in 2004.
