The United States' Real and Perceived Income Gap

Despite wealth disparity in the United States being a much-discussed topic over the past decades, the true size of the income gaps between the top 1% and the rest of the population is consistently perceived as smaller than it is. According to a YouGov survey from January 2022, U.S. Americans believe that ten percent of households in their country have an annual income of more than $1 million. As our chart shows, this couldn't be further from the truth.

In reality, less than 0.5 percent earn that much per year when taking into consideration data from the IRS. The difference between perception and facts is even more pronounced when looking at households with an annual income of more than $500,000. While the median weighted responses from survey participants suggest that one-fifth of U.S. households belong to that bracket, it's actually the oft-cited top 1%. On the other hand, U.S. Americans are overestimating the share of people having to scrape by with less than $25,000 per year. Instead of the perceived 35 percent who earn less than $25,000, the share stood at 18 percent in 2020.

When it comes to wealth instead of income, the survey participant's perceptions hit closer to home. For example, roughly 22 million people in the U.S. had a net worth of more than $1 million in 2020, which amounts to about seven percent of the population of the United States. Out of the 130 million households in the U.S., 13.6 million were considered to have accumulated wealth of more than $1 million, excluding their primary residence, according to data from Spectrem Group. As of the third quarter of 2021, the top 1% held about 32 percent of all wealth in the United States, up nine percent from three decades prior.