It’s decreasing now.

Gini Coefficient Trends. The single most common scalar measure of income inequality is the Gini Coefficient. Using our seven measures of income in Table 2 we report Gini values for peak years of all business cycles over the period 1959-2007 as well as for the most recent year of our data 2016. For all business cycle peak years and for 2016, Gini values are highest (most unequal) when we use our most restrictive income definitions—labor earnings or market income—and a tax unit as both our sharing unit and our unit of analysis and fall as we increasingly take into account government taxes and transfers.

This is reassuring since one of the goals of government tax and transfer policy is to transfer market income from Americans living in higher income households to Americans living in lower income households, and this occurred in all years. But what our new data set now shows is how Gini value trends have changed across each of these income measures since 1959. Focusing solely on the market income of tax units or the household size-adjusted market income of persons, Gini values increase over the period from 1959 to 1979—0.488 to 0.495 and 0.411 to 0.419 respectively. However, the reverse is the case when government in-cash transfers are taken into account. Gini values fall from 0.392 to 0.366. Gini values decline even more when using our preferred lower and upper bound measures of disposable income which fell from 0.362 to 0.304 and 0.350 to 0.288 respectively. Since 1979, income inequality has increased over all business cycles peak to peak years regardless of how we measure income. However, it is also the case that over the entire period from 1959 to 2007, income inequality has risen less, the fuller the measure of income chosen. As discussed previously, the current business cycle began in 2007 and is not yet complete since median income continued to grow from its business cycle trough up through 2016, our last year of data. Over the period 2007 through 2016 income inequality has also grown but it is still the case that this growth is slowest in our fuller measures of income.