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The Vicious Cycle of Income Inequality


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American income inequality has returned to the 1920s levels. With more and more Americans filing bankruptcy to get out of debt, many are wondering if the cycle will continue and usher in another Great Depression.

income inequality is a vicious cycle

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  • The "Roaring" 20s brings high income to the wealthiest of Americans.
  • Middle and low-income Americans do not see a substantial income increase.


  • The Great Depression causes economic collapse.
  • Wealthy Americans see income decrease.
  • Middle and low-income Americans see income decrease.

Late 1940's - Early 1970's

  • A period of growth begins.
  • Wealthy Americans see steady income growth.
  • Middle-class and low-income Americans see steady income growth.
  • Rate of growth is approximately the same, keeping a narrow gap.

Early 1970's - 2000's

  • Income gap begins widening.
  • Wealthy Americans see steady income growth.
  • In 2005, the top 1% of Americans earned 21.2% of all income.
  • In 2004, the top 1% earned 19%.
  • In 2000, the top 1% earned 20.8%.
In 2005, the bottom 50% of Americans earned 12.8% of all income.
  • In 2004, the bottom 50% earned 13.4%.
  • In 2000, the bottom 50% earned 13%.

Middle-class and low-income Americans see sharp decline in income growth.

The Economic recession begins in 2008.


  • Wealthiest of Americas are receiving a larger pre-tax share of the national income.
  • Though they saw an income decrease in the 2008 recession, their income has bounced back.
  • The top 1% of Americans account for 93% of the economic gains in 2010.
  • Income for middle-class and low-income Americans has continued to decrease since the recession.

Income inequality levels are now back to the 1920's levels.

  • As income inequality grows, the economy weakens.
  • Conversely, as the economy weakens, income inequality increases.

This infographic was brought to you by Total Bankruptcy.

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