Charles Petzold: That Bullshit Income-Inequality Meme

That Bullshit Income-Inequality Meme

June 17, 2024
New York, N.Y.

Memes can be fun and sometimes even informative, but when memes contain numbers — and particularly numbers without a source — memes can be deceptive and just plain wrong. For example, here’s a meme that’s been floating around that purports to illustrate income inequality in the United States:

Income Inequality Meme

If these numbers are correct, then a relatively few number of people are making so much money that they significantly throw off the average. I have no idea where this meme came from, and it’s not telling us where the numbers come from, but is it true?

Let’s do some simple calculations using the first two frames. If the average income in the United States is $74,500, then the total income is $74,500 times the total population (let’s call it P_TOTAL). The second frame implies that the total income of everyone minus the top 10 earners is the product of $65,000 and P_TOTAL minus 10. From this, it should be possible to calculate the average income of the top 10 earners (I_TOP10):

P_{TOTAL} \times 74,500 = (P_{TOTAL} - 10) \times 65,000 + 10 \times I_{TOP10}

Or:

I_{TOP10} = P_{TOTAL} \times \frac{(74,500 - 65,000)}{10} + 65,000

If you assume that the total population of the United States is 333 million, then this formula indicates that the top 10 earners in the United States make an average of $316 billion. This is way off. It was widely reported just recently that Elon Musk’s record-setting (and hair-raising) Tesla compensation amounted to $44.9 billion over ten years.

Doing similar calculations, the remaining two frames of the meme imply that the top 50 earners have an average annual income of $176 billion and the top 1000 earners make an average of $13 billion.

Even if you reduce the population to 130 million of people actually earning money (excluding children and retirees, for example), you still get ridiculous results.

But who cares? After all, any analysis that exposes income inequality in the U.S. is a good thing, right?

No. Spreading disinformation is always bad. Maintaining a distinction between the real and the fake is crucial in preserving a civil society that is based on a common acknowledgement of reality. Those who seek an autocratic regime prefer instead to blur that distinction so that nothing can be trusted.

It is essential for us to insist on truth, on reality, and on mathematical integrity. If we don’t, then we’re no better than the Trumpers.

So what does the actual data reveal?

It’s more common to analyze household income rather than individual income. Data is available from the U.S. Census site: Start at the Income Data page and from there go to the Income Data Tables page, and then to the Current Population Survey Tables for Household Income page and then HINC-06. Income Distribution to $250,000 or More for Households. From this page you can select a year (for example, 2022) and then download an Excel spreadsheet.

The first three columns of that spreadsheet show income ranges, the number of households in each range (in thousands), and the mean income of those in that range. I have taken the first three columns of that spreadsheet and then added additional columns. You can check my math by downloading my Excel spreadsheet or examine the results here:

				Accmulated Values
Income Range	Households (thousands)	Mean Income (dollars)	Total Income (dollars)	Households (thousands)	Total Income (dollars)	Mean Income (dollars)
Total	131,400	106,400	13,980,960,000

Under $5,000	4,305	877	3,775,485	4,305	3,775,485	877
$5,000 to $9,999	2,131	7,626	16,251,006	6,436	20,026,491	3,112
$10,000 to $14,999	4,536	12,440	56,427,840	10,972	76,454,331	6,968
$15,000 to $19,999	4,725	17,350	81,978,750	15,697	158,433,081	10,093
$20,000 to $24,999	5,047	22,250	112,295,750	20,744	270,728,831	13,051
$25,000 to $29,999	4,728	27,210	128,648,880	25,472	399,377,711	15,679
$30,000 to $34,999	5,285	32,000	169,120,000	30,757	568,497,711	18,484
$35,000 to $39,999	4,674	37,080	173,311,920	35,431	741,809,631	20,937
$40,000 to $44,999	4,761	41,960	199,771,560	40,192	941,581,191	23,427
$45,000 to $49,999	4,453	47,130	209,869,890	44,645	1,151,451,081	25,791
$50,000 to $54,999	4,838	51,880	250,995,440	49,483	1,402,446,521	28,342
$55,000 to $59,999	4,252	57,030	242,491,560	53,735	1,644,938,081	30,612
$60,000 to $64,999	4,463	61,880	276,170,440	58,198	1,921,108,521	33,010
$65,000 to $69,999	3,867	67,100	259,475,700	62,065	2,180,584,221	35,134
$70,000 to $74,999	3,904	71,990	281,048,960	65,969	2,461,633,181	37,315
$75,000 to $79,999	3,669	76,970	282,402,930	69,638	2,744,036,111	39,404
$80,000 to $84,999	3,505	81,950	287,234,750	73,143	3,031,270,861	41,443
$85,000 to $89,999	3,061	87,090	266,582,490	76,204	3,297,853,351	43,277
$90,000 to $94,999	3,132	91,930	287,924,760	79,336	3,585,778,111	45,197
$95,000 to $99,999	2,838	97,140	275,683,320	82,174	3,861,461,431	46,991
$100,000 to $104,999	3,312	101,800	337,161,600	85,486	4,198,623,031	49,115
$105,000 to $109,999	2,321	107,100	248,579,100	87,807	4,447,202,131	50,647
$110,000 to $114,999	2,462	112,000	275,744,000	90,269	4,722,946,131	52,321
$115,000 to $119,999	2,188	117,100	256,214,800	92,457	4,979,160,931	53,854
$120,000 to $124,999	2,421	121,800	294,877,800	94,878	5,274,038,731	55,588
$125,000 to $129,999	2,086	127,100	265,130,600	96,964	5,539,169,331	57,126
$130,000 to $134,999	1,996	132,000	263,472,000	98,960	5,802,641,331	58,636
$135,000 to $139,999	1,730	137,000	237,010,000	100,690	6,039,651,331	59,983
$140,000 to $144,999	1,680	141,900	238,392,000	102,370	6,278,043,331	61,327
$145,000 to $149,999	1,375	147,200	202,400,000	103,745	6,480,443,331	62,465
$150,000 to $154,999	2,005	151,900	304,559,500	105,750	6,785,002,831	64,161
$155,000 to $159,999	1,389	157,000	218,073,000	107,139	7,003,075,831	65,364
$160,000 to $164,999	1,461	162,000	236,682,000	108,600	7,239,757,831	66,664
$165,000 to $169,999	1,131	167,100	188,990,100	109,731	7,428,747,931	67,700
$170,000 to $174,999	1,144	172,100	196,882,400	110,875	7,625,630,331	68,777
$175,000 to $179,999	1,043	177,100	184,715,300	111,918	7,810,345,631	69,786
$180,000 to $184,999	1,106	182,100	201,402,600	113,024	8,011,748,231	70,885
$185,000 to $189,999	921	187,100	172,319,100	113,945	8,184,067,331	71,825
$190,000 to $194,999	940	192,100	180,574,000	114,885	8,364,641,331	72,809
$195,000 to $199,999	889	197,200	175,310,800	115,774	8,539,952,131	73,764
$200,000 to $249,999	6,024	221,100	1,331,906,400	121,798	9,871,858,531	81,051
$250,000 and over	9,636	426,600	4,110,717,600	131,434	13,982,576,131	106,385

I too wish that the data were broken down for incomes of $250,000 and over. It’s the largest category by population and a further breakdown would be quite useful.

The fourth column (Total Income) is just the number of people in each income range times the Mean Income for that range. This is also in thousands. That category of $250,000 and over reveals some startling results: It’s about 7.3% of the households, but accounts for 29% of total income.

The next two columns show the Number of Households and Total Income accumulated from the top down. From these two figures, the Mean Income can then be calculated. These figures show the average income for everyone up to and including those in each income range. (The accumulated values in the bottom row do not match exactly the values in the Total row due to rounding errors.)

By examining the last two numbers in the final column, we can note that the top income range — households making over $250,000 a year — makes quite a difference in the average: a difference of about $25,000. However, that top category include nearly 10 million households! Not 10, not 50, and not 1000. Almost 10 million.

Visual demonstrations of income and wealth inequality are difficult. But obviously, this is not quite the right way to do it.

Nor is it a good idea ever to completely fabricate numbers.