If any one theme dominated economic policy debates and research over the past year, it was income inequality. The debate was kicked into high gear when French economist Thomas Piketty‘s book “Capital in the Twenty-First Century” became a runaway best seller. (It’s not clear how many people who bought the book actually read much of it.)
When President Barack Obama and Pope Francis met, they mostly talked about inequality. Economists, policy makers and think tanks have devoted extensive energy to researching and quantifying these trends, likely keeping it a leading topic in 2015.
Here are 14 charts, curated from our coverage at Real Time Economics over the past year, that tell the story of rising inequality.
1. This Economic Policy Institute chart shows that in recent decades, the average incomes of the wealthiest 1% have dramatically outpaced the incomes of everyone else.
2. Economists have pointed to inequality as one reason the economic recovery of recent years has been so dissatisfying to many Americans. This chart of Commerce Department data shows that, per person, the economy’s gross domestic product has grown by more than $6,000 since 1999. But the median income has declined by more than $4,000. Policy makers at the Fed and White House have, unsurprisingly, gotten little credit for the economy’s growth as none of that growth has made it to the wallets of the median American.
3. Though economists agree that stark inequality has arisen, not all agree on the causes of inequality or whether it’s the role of government policy makers to attempt to address it. Economic policy makers around the world weighed in on the debate, sometimes controversially. Federal Reserve Chairwoman Janet Yellen took up the issue in an October speech in Boston:
“It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”
The Organization for Economic Cooperation and Development (more here) and the International Monetary Fund (more here) said they believe the rise in inequality could be slowing economic growth around the world. Researchers from Wall Street, such as Standard & Poor’s (here) and Morgan Stanley (here), also said inequality may be harming economies.
4. The annual income Americans earn is unevenly distributed, and the wealth gap is widening. The Pew Research Center has calculated that upper-income families now havenet worth that is 6.6 times greater than middle-income families–a record high.
5. The U.S. has a wealth gap that’s particularly pronounced along racial lines. White households have a median net worth of $141,900. That’s 12.9 times more than black families and 10.3 times more than Hispanic families.
6. Within the United States, income inequality is most pronounced in the Southern half of the country. “In the 1980s and 1990s, income inequality and poverty intersected primarily in Appalachia, the Deep South, and parts of California and the Southwest,” said a report from the Population Reference Bureau, a nonprofit demographic research group. “But during the past decade, poverty and inequality spread to new areas in Alabama, the Carolinas, Georgia, Michigan and Tennessee.”
7. Inequality is a global phenomenon. Data from the World Bank rank the U.S. as the 22nd most unequal country, with inequality lower than some African and Latin American nations, but higher than most other developed countries. Research from the investment bank Credit Suisse showed that the U.S. has an especially high concentration of the world’s superrich, that is, those with net worth above $50 million.
8. While economists have debated the reasons for rising inequality, one clear factor is education. Over a 42-year career, male college graduates take in almost $600,000 more than men who stopped their education after high school. For women, the gap is $370,000.
9. But reducing gaps through education is easier said than done. Children of wealthy parents, for example, score much better on the SATs than children of poor parents.
10. Even in death, inequality is inescapable. Research from Barry Bosworth of the Brookings Institution estimates a striking relationship between inequality and life expectancy. In other words: the richer you are, the older you’ll get.
11. Many of these correlations are unsurprising, but still striking to see measured. The wealthy can afford better education and better medical care. Naturally brilliant and robust people may have it easier in the job market, and naturally pass those traits to their children. But it’s also easy to see why some researchers find that data disconcerting.
12. Researchers have also delved into how the assets of the wealthy differ. It’s no surprise, after all, that the wealthy are more likely to own more stocks. But research also shows that lower-income people are more likely to be hurt by stock downturns, as they’re more likely to sell their stocks at a loss, another factor behind widening wealth gaps.
13. The wealthy have much smaller share of wealth invested in their homes. That helps explain why the recent recession, which hinged on a national collapse in home prices, hit the middle class especially hard. And it explains why the recovery in corporate profits hasn’t led to a widespread feeling of recovery. Research from New York University economist Edward Wolff shows that primary residences, life insurance and pension accounts, in particular, are the key assets of the middle class.
14. To end with a bit of good news, for most Americans their own jobs are their key source of economic stability. And on the jobs front, the economy is heading into 2015 with some of the strongest performance in 15 years. Inequality has been a slowly growing trend in the U.S. economy and is unlikely to recede quickly. But as more Americans find good jobs, at least the anxiety about inequality may fade.