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MAKING AMERICA WORK: ALFRED P. MURRAH PROFESSORSHIP INAUGURAL LECTURE* - page 5 / 20

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5 / 20

2006]

MAKING AMERICA WORK

57

The dark gray bars show how government taxes and transfers reduce economic inequality. After taxes and transfers, the richest 20% had 45% of “disposable” income, and the poorest 20% of households saw their income share grow to almost 5% of disposable income. All in all, taxes and transfers reduce household income inequality by about 20%.

But that still leaves us with a pretty unequal distribution of income.

  • B.

    Why Is There So Much Inequality? Why is there so much inequality in the United States?

    • 1.

      Earnings Inequality

Much of that inequality is attributable to the fact that there is a great deal of inequality in the distribution of individual earnings. Some people just get paid a lot more than others for their forty hours per week of work. For example, Table 1 shows that the average lawyer made $106,000 in 2004, the average police officer made $50,000, the average secretary made $32,000, and the average waitress made $9,000. Are these the income levels that Plato’s philosopher-king would choose for us?

Occupation

M ean annual

M ean annual

M ean hourly

earnings

hours

earnings

Physicians

$128,689

Airplane pilots and navigators

$128,406

Lawyers

$105,716

M anagers, marketing, advertising, and public relations

$103,704

Economics teachers

$099,516

Law teachers

$089,947

Dentists

$082,437

Actuaries

$072,088

Economists

$071,672

Registered nurses

$053,289

Psychologists

$051,508

Accountants and auditors

$050,761

Police and detectives, public service

$050,063

Secondary school teachers

$046,038

Elementary school teachers

$045,296

M achinists

$040,736

Automobile mechanics

$038,967

002,243

$57.90

001,083

113.82

002,174

$48.60

002,131

$48.65

001,555

$63.98

001,526

$57.05

002,142

$42.91

002,179

$33.09

002,171

$33.02

002,002

$26.87

001,776

$28.49

002,073

$24.56

002,073

$24.10

001,416

$32.53

001,393

$32.46

002,078

$19.59

002,097

$18.37

TABLE 1. ANNUAL EARNINGS, ANNUAL HOURS, AND HOURLY EARNINGS OF FULL-TIME WORKERS, 2004

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