The Federal Reserve Bank of Boston is pleased to announce the availability on its public web site of an interactive graphic that illustrates income inequality in the United States and the mobility of U.S. families across income classes.

Income mobility is of interest mainly because a high degree of movement across income classes over time can even out the effects of income inequality. The graphic provides a new way to explore and understand such information through an interactive visual framework. It is timely in light of current public policy discussion about U.S. income inequality.

The main finding is that family income mobility in the United States has been limited in recent years. Among U.S. families, sorted from poorest to richest across five income classes in 1994 and 2004, 40 percent of U.S. families were in the same income class in 2004 as in 1994, and only 22 percent moved up or down by more than one class. Those who started in the poorest or richest classes were the least likely to move: Over half of these families were in the same class in 2004 as in 1994.

Focusing next on income changes of individual families (rather than movements across income classes), the data indicate that families who began in lower income classes saw their incomes rise by larger percentages but still ended up poorer, on average, than those who began in higher classes.

In addition, the graphic breaks out the patterns of mobility, inequality, and income changes by race.