number and proportion of families with incomes of $5,000 or more (again in 1948 dollars) rose considerably. Unrelated individuals (persons not living with any relative) were heavily concentrated, in both 1948 and 1954, in the lower income levels; in 1954 about 40 percent of the unrelated individuals with incomes of less than $2,000 were 65 years old and over.

TABLE 28. Families and Individuals by Total Money Income, 1948 and 1954 (In 1948 dollars)

Source: U. S. Department of Commerce, Bureau of the Census, Family Income in the United States: 1954 and 1953 (Series P-60, No. 20) December 1955 (p. 4).

A subsequent report shows that further increases in levels of both money and real income occurred in 1955, with the proportion of families in the $5,000 and over group continuing to rise.

II. The Office of Business Economics of the U. S. Department of Commerce prepares periodic estimates on the size distribution of personal income, related to the general body of the national income statistics. Its estimates are a combination of two basic sources the Census field surveys (see I., above), and income tax returns which are adjusted to totals consistent with the personal income series. These data are available in: Income Distribution in the U. S., by Size, 1944-1950, a Supplement to the Survey of Current Business, 1953; and in articles in the March 1955 and June 1956 Survey of Current Business, entitled "Income Distribution in the United States."

These studies show that the average annual income (including nonmonetary income) per family, after taxes, has risen, between 1929 and 1955, by about $50 per year (in terms of 1955 dollars), or an annual rate of growth of over 1 percent. See table 29.

TABLE 29.-Average Family Personal Income Before and After Federal
Individual Income Tax Liability, Selected Years, 1929-55

1 The price indexes used as deflators are those employed in deflating the personal consumption expenditure series in the national income accounts.

Source: Survey of Current Business, June 1956 (p. 10).

Data from the above source, and from studies for earlier years by Selma F. Goldsmith and others, make possible a comparison of the changes in the distribution of income during the past 20 years. Table 30 shows that consumer units in the lower income quintiles made relatively greater gains than did those in the upper quintiles, and that the more pronounced increases occurred during the earlier years.

TABLE 30.-Average Before-Tax Incomes of Individual and Family Consumer Units in the United States, Ranked by Size of Income, in constant dollars, 1935-36, 1941, 1950, 1954.

Source: Selma F. Goldsmith and others, Size Distribution of Income Since the Mid-Thirties (in Review of Economics and Statistics, February 1954); and U. S. Department of Commerce, Survey of Current Business, March 1955 and June 1956. (See also Simon Kuznets, Economic Growth and Income Inequality, in American Economic Review, March 1955.) Estimates for earlier years were converted into 1954 dollars by means of the price indexes employed in deflating the national income accounts.

Higher rates of growth in the lower as compared with the upper quintiles suggest a tendency toward more equal distribution of income. Differences in the rate of increase are even more pronounced after account is taken of the effects of the Federal income tax. The tax liability on the average income in the lowest quintile in 1954 was estimated as less than 3 percent, whereas the liability on the income in the highest quintile averaged 13.5 percent, and for the top 20th of income receivers, 18.6 percent. (For information on Federal income taxes, see p. 155.)

III. The Federal Reserve Board has conducted each year since 1945 (in cooperation with the Survey Research Center of the University of Michigan) a sample Survey of Consumer Finances, which provides information on the size distribution of income in addition to considerable other data. These data are carried annually in the Federal Reserve Bulletin. They too show the steady growth in both dollar and real income since the end of World War II, and the relatively greater increases at the lower end of the scale; the proportion of spending units receiving the equivalent of $5,000 or more in 1955 dollars increased about two-thirds from 1947 to 1955, from about 20 percent to 35 percent.

Table 31 shows median incomes for various occupational groups, and the percentage increases in those incomes during the period of high employment and production between 1946 and 1955. The dollar

TABLE 31.-Average (Median) Incomes of Family and Individual Spending Units By Occupation of Head of Unit, 1946 and 1955

amounts are shown both in actual dollars, and after adjustment for changes in the Consumer Price Index. Skilled and semiskilled workers made the largest gains, reflecting the great postwar rise in industrial productivity, the importance of manufacturing and construction in the postwar economy, and the spread of unionization.

IV. Professor Simon Kuznets found a similar trend also over a longer period. The upper income groups greatly increased their incomes; but the lower income groups gained proportionately more. Percentage shares in countrywide income since 1913 have been estimated as follows:

The per capita income of the lower 99 percent of the population was more than 4 times as high in 1948 as it had been in 1913, whereas the income of the top 1 percent had little more than doubled. (To merely double one's income during the period was to lose ground, as the Consumer Price Index rose by 21⁄2 times.)

The development was not consistent, however. The mass of the population participated to only a limited extent in the boom of the twenties, and lost ground relatively. They gained far more, however, during the first world war, and during the thirties they lost less, than the top 1 percent of income receivers. The years 1939 to 1948 brought the greatest contrast in favor of the lower group. From 1929 to 1948-taking two periods together the income of the upper 1 percent rose 8 percent; that of the lower 99 percent rose 124 percent. The really marked shifts of the years from 1913 to 1948 occurred in the thirties and forties.

The figures used cover income before taxes. If allowance is made for taxes, the shift is greater. It is stated, however, that income taxation was not very influential in the leveling process described. More important were the enormous increases in wages and salaries, as compared with income from rents, dividends, and interest. Other reasons noted were the high level of employment, and increase in the employment of women, resulting in double pay checks in many lowincome families. Farm prosperity also had its influence. With fewer farm families, technological improvement, government support, and high demand, many farmers were able to move up into the middleincome group.

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The spread between high and low incomes was then as as at any earlier time of which we have record. The depression World War II created the totally new distribution pictured in evious pages. In 1948 it took the average millionaire three years to make the income-after-taxes that he made in the one year 1929; and there were far fewer millionaires.

Net Incomes of City Wage-Earner and Clerical-Worker Families in the United States, 1950

The average net income of all urban wage-earner and clerical-worker families in the United States during the year 1950 has been estimated at $3,900. (As indicated below, the estimate is based on a sample of families.) Note that the figure applies to the income of a family. There were 3.3 persons in the average sample family. On the average there was only one full-time worker, but some other members of the family often worked part time, or worked full time during part of the year. Although no exhaustive study of family incomes has been made since 1950, various less extensive surveys indicate that the average city wage-earner family's income had increased by 1953 to about $4,700.

Worker family incomes average higher, as the following table shows, in northern and western cities than in the South. Average 1950 wageearner and clerical-worker family incomes in the 42 smaller cities studied (not shown in the table) ranged from $4,689 in Middletown, Connecticut, and $4,698 in Antioch, California, down to $2,526 in Demopolis, Alabama, and $2,620 in Camden, Arkansas. The city averages of course reflect many special local conditions.