Where Do the Poorest Americans Stand in the Income Distribution among All People Ever Born?

• Author: Whaples, Robert M.
• Position: Etceteras ...

Founding editor of The Independent Review Robert Higgs reminds us that "[i]ncome inequality is a statistical artifact.... The aggregate of the measure is arbitrary: why, for example, should inequality be measured for the entire U.S. population rather than for the population of the city or state in which one lives, the entire North American population (including Mexico), the entire Western Hemisphere population, or indeed the entire world population?" (2014).

He might have added "or indeed the entire world population throughout all of history." In fact, measuring inequality this way may be very illuminating. Therefore, in the calculations below I take a preliminary stab at putting the incomes of today's poor Americans into the broadest historical perspective.

Branko Milanovic (2010) provides data showing where people in different income ventiles (twentieths of the distribution) in several countries fall within the world's income distribution. He finds that the income of the poorest 5 percent of Americans puts them at the 68th percentile of the world's income distribution in 2010. Poor Americans are rather rich by the world's standards today. However, they are far richer in comparison to all the people who have ever lived.

Virtually everyone in the premodern era lived at a small multiple of the subsistence level. Although subsistence cannot be precisely measured, Milanovic, Lindert, and Williamson (2007) estimate (following Angus Maddison 2001) that subsistence equals $400 per year in 1990 dollars, which equals about $855 per year today. Jeffrey Williamson (2009, 29-30) provides estimates of the ratio of the mean income to the subsistence income for a wide range of countries over a period of almost two thousand years. In the years before modern economic growth began, these ratios averaged about 3.1--falling below 2 in places like medieval Byzantium (AD 1000), Mughal India (1750), Qing China (1880), and colonial Kenya (1927), while slightly exceeding 2 in ancient Rome and exceeding 5 in a handful of places, including England (1759) and Holland (1732). Although a few places still have very low mean-income to subsistence-income ratios--both Tanzania and the Democratic Republic of Congo fell below 2 at the turn of the millennium--the ratio is now over 60 in places like Britain, France, Germany, Italy, Japan, and the United States (where it is over 80).

The U.S. Census's Annual Social and Economic Supplement reports incomes of $0 and $800 for the...