The previous two blog posts -- the December 2024, the April 2025 -- and this one comprise a summary of what I have been saying since I began blogging over a decade ago. They work together. The main problem has been no growth in wages since 1973. The solutions are multiple. That's the outline for this posting and the previous two. Societal happiness on one hand or societal distress and lost dreams hang on the outcome of money issues. Survival itself. The economy is complex, the solutions defy simplicity. 

The first, here, is about income distribution. The next explains and 'proves' that 40% of U.S. society have been left out of prosperity and damaged by our malfunctioning economy. And the December one is about Solutions. And it's long; I offer about a dozen solutions. 

            The CBO Report on Inequality                                                "Distribution of Household Income, 2018" is the title, but it covers the period between 1979 and 2018, a 39 year period. My focus will be on  Exhibit 22 (page 32), as it demonstrates the unequal gains the top 20% made during the 39 year period. The CBO title for the pdf report is "Trends in the Distribution of Income After Transfers and Taxes, 1979 to 2018" from the Congressional Budget Office.  

Below the graph is a link to the data source, where we uncover the details, see "Data Underlying the Exhibits". I find the details inflamatory, a conclusive set of evidence that our economy has failed. The table shows 3 groups' average incomes over 39 years; the groups are the lowest earning 20%, the middle 3 quintiles or middle 60% average income, and the average income for the top quintile or 20%.

                   

The table shows that the lowest 20% increased their real (inflation adjusted) incomes  by $18,000, from $19.7K to $37.7K. This is a 91% gain, mostly caused by government transfers of in-kind services or income. This graph above is post-tax and post-transfer income.

The middle 60% grew their income by $25,600, from $48,200 to $73,800. This is an 88% gain. 

The top quintile grew their income by $132,800, from $111.1K to $243.9K, an increase of 119%. 

This shows that 58% of growth went to the top 20%, and 34% went to the middle 60%, and 8% went to the lower 20%. This finding is similar to the finding from a study by the Economic Policy Institute, "The New Gilded Age". This study reviewed  disparate growth between 1945 and 1973, and a switch to disparate growth favoring the richest from 1973 to 2018. On page 12, pdf version, we learn the staggering differences,  

"The average inflation-adjusted income of the bottom 99 percent of families grew by 100.1 percent between 1945 and 1973. Over the same period, the average income of the top 1 percent of families grew by 34.3 percent. Faster income growth for the bottom 99 percent of families meant that the top 1 percent captured just 4.9 percent of all income growth over the period. (Data are shown in Appendix Table B7.)
The pattern in the distribution of income growth reversed itself from 1973 to 2007 as the income of the bottom 99 percent of families grew much more slowly (by just 15.4 percent) compared with the top 1 percent, whose average income grew by 216.4 percent. As a result, over half (58.7 percent) of all income growth in this period landed in the hands of the top 1 percent of families. (Data are shown in Appendix Table B8.)"

I find it strange but conclusive that the "58%" figure occurs in the New Gilded Age report, and in my calculation of unequal growth in the CBO report. Perhaps it is accurate? But I refer to CBO report showing the top 20%, the EPI report refers to the top 1%. 

The Federal Reserve provides (here, here, and here) data showing growth between June 1979 and June 2018: 1) Real Disposable Personal Income grew by 102%; 2) Real Gross Domestic Product grew by 90% during the 39 year period, and 3) Real Personal Consumption Expenditures grew by 108%. This is somewhat consistent with the growth figures for post-tax incomes. 

The pre-tax incomes -- not post-tax -- of the 3 groups are shown in Exhibit 3. Comparing the pre-tax with the post-tax gives an indication that the post-transfer distributions were greater, especially for the lowest 20%, and the tax burden was lower in 2018, especially for the higher incomes. It shows that the pre-tax income of the lowest 20% in 1979 was $16,100, and post-tax it was $19,700, a gain of $3,600 or of 22%. This changes radically by 2018. The pre-tax average is $19,700 and post-tax it's $37,700, a gain of $18,000 or 95%. Government transfers increased greatly for the lower-earning group.   

And for the highest earning 20%, their federal tax rate dropped from 27% in 1979 to 24% in 2018, even though their incomes had increased by 91%, from $111.1K to $243.9K. I believe the tax cuts occured under Reagan, Bush 2, and Trump. We can check that at this article from the Center for American Progress, "Tax Cuts Are Primarily Responsible for the Increasing Debt Ratio."   

I visualize the economy from the CBO report as the 10 - 20 - 20 - 20 - 70 income distribution economy. Roughly, the lower 20% receives 10 dollars, the next 3 quintiles receive 60 dollars, and the last 20% receives 70 dollars; the total for all is 140. The top 20% receives about half. The CBO report states that the top 20% receives 48% of all post-tax and post-transfer income, and that reflects roughly the 10-20-20-20-70 picture I paint. This is a social disaster, in my opinion, if you hadn't already guessed. 

   The RealTime Inequality Comparison   
Let's compare the CBO's chart with the RealTime Inequality graph. This shows percentage of income growth 1976 to 2018. The top red is the top 10%, the dotted white is the average growth, the blue the middle 40%, and the orange is the lower 50% of households, post-tax and post-transfer income movement. First graph is growth:  

The next shows RealTime's graph on "Average Real Income" for the 3 groups and the dotted white for all groups , 

This graph indicates, 1979 to 2018, the households in the lower 50% grew their real post-tax and post-transfer income by $8,200. The middle 40%, between the 50th and 90th percentiles, grew their incomes by $30,500, and the top 10% grew their incomes by $239,100. This is really grotesque! 

I can't understand how anyone would not be disgusted. 
I understand why many people are disgusted with the status quo. 

The CBO shows the lowest 20%, then the middle 60%, and the top 20%.
The RealTime shows the lowest 50%, then the middle 40%, and the top 10%. 
Both indicate the top income growth and total income levels far surpasses the growth and incomes in the lower-earning household population.   

 I think the above argument and graphs are central to understanding how distressed the U.S. population is about the malfunctioning economy. The lion's share goes to the richest and the crumbs go to the poorest.