Federal Reserve chairman issues warning on social inequality

February 8, 2007
Federal Reserve chairman issues warning on social inequality

He noted that wages at the 50th percentile ("the median wage") had risen approximately 11.5
percent between 1979 and 2006, while wages at the 10th percentile ("near the bottom of the wage
distribution") had climbed just 4 percent and earnings at the 90th percentile ("close to the top
of the distribution") had jumped 34 percent. Bernanke pointed out that the worker at the 90th
percentile now earned 4.7 times as much as the worker at the 10th percentile, compared to a ratio
of 3.7 in 1979.

The federal reserve chairman went on to say that greater inequality was also evident in other
measures of financial well-being, such as real household income. Figures showed, he said, that the
share of the national income received by households in the top fifth of the income distribution
rose from 42 percent in 1979 to 50 percent in 2004 (a 19 percent increase), while the share of the
bottom 20 percent of households had declined from 7 to 5 percent (a 29 percent decline). He took
note of the fact that the wealthiest 1 percent of households had seen its share of after-tax
income increase from 8 percent in 1979 to 14 percent in 2004 (a 57 percent jump).