page_title: Income inequality in the United States
section_title: Definitions
hierarchical_section_title: Income inequality in the United States / Definitions
caption_attribution_description: English: U.S. Top 1&#160;% Income Shares, CBO and PSZ Data 1979 - 2016
context_page_description: Income inequality in the United States is the extent to which income is distributed in an uneven manner among the American population. It has fluctuated considerably since measurements began around 1915, moving in an arc between peaks in the 1920s and 2000s, with a 30-year period of relatively lower inequality between 1950–1980.
  The U.S. has the highest level of income inequality among its industrialized peers. When measured for all households, U.S. income inequality is comparable to other developed countries before taxes and transfers, but is among the highest after taxes and transfers, meaning the U.S. shifts relatively less income from higher income households to lower income households. In 2016, average market income was $15,600 for the lowest quintile and $280,300 for the highest quintile. The degree of inequality accelerated within the top quintile, with the top 1% at $1.8 million, approximately 30 times the $59,300 income of the middle quintile.
context_section_description: Income distribution can be assessed using a variety of income definitions. Adjustments are applied for various reasons, particularly to better reflect the actual economic resources available to a given individual/household.
  Market income—Labor income; business income; capital income (including capital gains); income received in retirement for past services; and other non-governmental sources of income
  Income before taxes and transfers (IBTT)—market income plus social insurance benefits (including benefits from Social Security, Medicare, unemployment insurance, and workers’ compensation)
  Adjusted compensation or income after taxes and transfers—IBTT plus employee benefits and transfers such as housing subsidies, minus taxes
  Gini coefficient—Summarizes income distribution. It uses a scale from 0 to 1. Zero represents perfect equality (everyone having the same income), while 1 represents perfect inequality (one person receiving all the income). (Index scores are commonly multiplied by 100.)
  The CBO explains the Gini as "A standard composite measure of income inequality is the Gini coefficient, which summarizes an entire distribution in a single number that ranges from zero to one. A value of zero indicates complete equality (for example, if each household received the same amount of income), and a value of one indicates complete inequality (for example, if a single household received all the income). Thus, a Gini coefficient that increases over time indicates rising income inequality." 
  "The Gini coefficient can also be interpreted as a measure of one-half of the average difference in income between every pair of households in the population, divided by the average income of the total population. For example, the Gini coefficient of 0.513 for 2016 indicates that the average difference in income between pairs of households in that year was equal to 102.6 percent (twice 0.513) of average household income in 2016, or about $70,700 (adjusted to account for differences in household size). Similarly, the Gini coefficient of 0.521 projected for 2021 indicates that the average difference in income between pairs of households would equal 104.2 percent (twice 0.521) of average household income in 2021, or about $77,800 (in 2016 dollars)."
caption: Top 1% share of US income pre-tax (blue and orange) and after-tax (green).[13][3]
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