BY SELMA F. GOLDSMITH Size Distribution of Personal Income, 1956-59 REFLECTING the cycli- and unattached individuals. cal upswing in economic ac- Tills article brings up-to-date the estimates of the distribu- The per-family average, it tivity, the flow of personal tion of families and family income presented in the April 1959 may be noted, is consider- income to families and un- issue of the SURVEY OF CURRENT BUSINESS. Included in the ably higher than the earnings attached individuals reached present article are revised family income distributions for 1956 average on a per-empk)37ee a record total of $362 billion and 1957, and preliminary estimates for 1958 and 1959. For a basis. In 1959, for example, detailed discussion of sources and methods, the reader is referred in 1959. This was $20 to the Technical Note in the April 1958 issue of the SURVEY and the mean income of $6,520 billion, or 6 percent, more to the supplement to the SURVEY in which the income size dis- per family and unattached than in 1958 and 8K percent tributions were initiated, entitled "Income Distribution in the individual exceeded the aver- above 1957. United States, by Size, 1944-50" (U.S. Government Printing age annual earnings per em- When distributed among: Office, Washington 25, B.C., 1953, price 65 cents). A discus- ployee by almost $2,000 sion of postwar and prewar changes in income distribution is the Nation's 56 million fam- included in the report of the Office of Business Economics on (table 1). Part of the differ- ilies and unattached indi- U.S., Income and Output (U.S. Government Printing Office, ence is explained by the fact viduals, personal income Washington 25, D.C., 1958, price $1.50). that many families have more averaged $6,520 in 1959, than one person working, and Income per family was about part by the inclusion in $250 higher than the year before and presented here have been adjusted to family income of dividends, interest, $300 above the average for 1957. agree statistically with the family earnings from self employment, and When allowance is made for increases income totals included in the personal other types of personal income, in in consumer prices, the 1958-59 ad- income series. addition to the wages and salaries vance in average real income per family covered in the employee average. and individual is found to have been Family average income exceeds $6,509 In the range above the average 3 percent. Over the 4-year period The largest concentration of families income bracket, 10 percent of con- since 1955, the increase has averaged and unattached individuals in 1959 sumers received between $8,000 and 1% percent per year. was in the income range between $4,000 $10,000, and 14 percent had more than The distribution of personal income and $6,000, in which were located 24 $10,000. At the lower end of the scale in 1959 among the Nation's 45 million percent of the total number of con- less than 14 percent received incomes families (units of two or more related sumer units. This bracket contained under $2,000, many of which were persons living together) and 11 million botli the modal and median family single consumers or farm families. unattached individuals (person- no t incomes. The mode, estimated at about The distribution of income was living with relatives) is shown iu the $4,600 in 1959, represented the most pitched higher on the income scale than accompanying chart. The bars at the frequent or usual family income; the the distribution of families. As the left of the chart show the percentage median, at approximately $5,300, was chart indicates, about one-half of total of families and individuals in each per- the average that divided the distri- family personal income accrued to the sonal income range, and those at the bution into two parts of equal num- three-fourths of families and individuals right the percentage share of total ber—half the families and individuals with incomes below $8,000. The other income received by each group. In had incomes below the median and one-half was distributed among the interpreting the chart it should be half had incomes above it. upper income groups, with the top noted that the figures are preliminary, Another two-fifths of consumers were income ranges accounting, of course, although they are believed to reflect in the two income ranges adjoining the for a much larger proportion of total the actual situation quite closely, $4,000 to $6,000 bracket in the chart. income than of the total number of Comprehensive data from tax returns Twenty-one percent had personal in- families arid single consumers. are not yet available for 1958 or 1959 come between $2,000 and $4,000, and During 1959 there was a general and the estimates of income distribu- 18 percent received between $6,000 and shift of families and individuals up the tion for those 2 years have been $8,000. The latter range included the income scale, continuing the trend that extended from 1957 tax-re turn-based average (mean) income of $6,520, has prevailed during the postwar period. figures by sample survey data on obtained by dividing total income Interrupted only in the recession years family incomes. All of the figures by the total number of families of 1949, 1954, and 1958, the number of April 1960 SURVEY OF CURRENT BUSINESS 9 families with incomes above $4,000 Table 1.—Average Family Personal Income Before and After Federal Individual Income increased in most years by about \% to Tax Liability and Average Annual Earnings Per Full-Time Employee 2K million. In 1959, 37 million con- Average (mean) personal income per family Number of and unattached individual Average sumer units had personal incomes over families (mean) and unat- annual $4,000 as compared with 17 million in tached Before tax After tax earnings individuals per full- 1947 (table 2). (millions) time em- In current In 1959 In current In 1959 ployee (in The upward shift of families and dollars dollars 1 dollars dollars l current individuals into income brackets above dollars) $4,000 appears also, though substan- 1929 36. 1 $2, 340 $4,100 $2,320 $4,070 $1,405 tially dampened, in the income size 1947 _ 44.7 4,130 5,290 3,720 4,770 2, 589 distribution figures after they have 1948 46. 3 4,350 5. 260 4,010 4,850 2,795 1949 47.8 4,170 5,080 3,860 4, 710 2,851 been corrected for the rise iri consumer 1950 . 48. 9 4, 440 5,340 4,070 4, 890 3,008 prices. This correction has been made, 1951 49. 5 4, 900 5, 530 4,420 4,980 3,231 1952 .. 50.2 5,120 5,650 4,570 5,040 3,414 in approximate fashion, in table 3, 1953 .. _ 50. 5 5, 390 5,900 4,810 5,260 3,687 where the implicit price deflator for 1954 51.2 5.360 5, 800 4,840 5,240 3,670 1955 52. 2 5,640 6, 080 5,090 5,490 3,847 personal consumption expenditures 1956 52.8 6.010 6, 370 5,400 5, 730 4, 036 (1959= 100) has been applied uniformly 1957 53. 6 6,220 6.410 5, 590 5,760 4,205 1958 .. 54. 6 6, 260 6, 330 5,650 5,710 4,344 to all income brackets. 1959 55. 6 6, 520 6 520 5,880 5,880 4,573 Annual increases in the number of r 1. The price indexes used as deflators are those employed in deflating the ix'rsonal consumption expenditure series in the na- consumer units in upper income brack- tional income accounts. ets, which had been arrested in 1958, Source: U.S. Department of Commerce, Office of Business Economies. appeared again last year. The number of families with more than $4,000 of was about the same on an after-income- income, are of a more approximate real income in terms of 1959 prices tax basis, because reductions in Federal nature than the annual income distri- increased by 2 million between 1957 l income tax rates were offset by the and 1959, and by a total of l2 / million butions in which the only variable is 2 upward shift of families into higher tax income size. The breakdowns were since 1947. brackets. developed by combining information Income before and after taxes Before-tax income per family lias from tax returns with data from sample grown at an annual rate that averaged Federal individual income tax liabil- 1/2 percent over the past 30 years. ities of families and single consumers Family Personal Income in 1959 Coupled with a similar rate of growth averaged $640 in 1959. This was in the number of families and single Distribution by income bracket- moderately up from 1957 and 1958 consumers, this meant that the rate of reflecting the shift of families into advance in the total flow of real Percent of higher tax-rate brackets that has accom- Aggregate (before-tax) family income has averaged panied the advance in incomes. The 3 percent per year since 1929. tax liability figures exclude capital Reflecting the upswing in income tax gains taxes because the gains them- liabilities introduced during World War selves are not counted in measuring II arid the high level of taxes maintained family income. State and local income in the postwar years, the 30-year rate taxes, which are also excluded, added of growth has been somewhat smaller only about $35 to the average family in after-tax income.