If income inequality is rising in the United States, that means bad news for the poor and middle class, right? Aparna Mathur, resident scholar at the American Enterprise Institute, warns National Review Online readers to be careful about making that assumption.

The Census Bureau’s “Income and Poverty” report, released in September, underscored that the economic recovery has largely failed to reach the poor and middle class. However, there is a subtle but substantive difference between stating that inequality is worse today than it was 30 years ago, and that people are worse off today than they were 30 years ago. Rising inequality does not preclude an improvement in standards of living at the bottom of the income distribution. …

… In 1984, households in the top income quintile accounted for 37 percent of total expenditures, while households in the bottom quintile accounted for 10 percent. Hence the ratio of top to bottom consumption was approximately 3.7:1. In 2010, that ratio increased to 4.4:1. On average, over the entire period, the ratio is 4.3:1 with a standard deviation of 0.22. Therefore, using this measure, we find that consumption inequality has increased only marginally over time. The gap was widest in 2005, when the share of consumption for the top was 39 percent relative to 8 percent at the bottom, or 4.9:1. In the recent recession, it appears that households at the bottom increased their share by 1 percentage point, relative to their 2005 share, while the share for the top either declined or remained steady. In the 2001 recession, the ratio declined as well, suggesting that recessions tend to foster a more even distribution. …

… [A]ccess of low-income Americans — those earning less than $20,000 in real 2009 dollars — to devices that are part of the “good life” has increased. The percentage of low-income households with a computer rose from 19.8 percent to 47.7 percenct in 2001. The percentage of low-income homes with six or more rooms (excluding bathrooms) rose from 21.9 percent to 30 percent over the same period.

In terms of appliances, the percentage of low-income homes with air-conditioning equipment rose from 65.8 percent to 83.5 percent; with dishwashers from 17.6 percent to 30.8 percent; with a washing machine from 57.2 percent to 62.4 percent; and with a clothes dryer from 44.9 percent to 56.5 percent.

The percentage of low-income households with microwave ovens grew from 74.9 percent to 92.4 percent between 2001 and 2009. Fully 75.5 percent of low-income Americans now have a cell phone, and over a quarter of those have access to the Internet through their phones.

In general, we find that people at all income levels now have access to many more material possessions than they did in the 1980s. Moreover, there has been a narrowing of the gap between high- and low-income classes in terms of owning these items. It’s hard to argue that these trends do not represent an improvement in the standard of living. Yet, over a similar period, the standard income dataset for households, the Current Population Survey, shows that the ratio of pre-tax incomes at the top quintile to those in the bottom quintile rose from 11:1 to 15.4:1. Hence the rise in income inequality has coincided with the rise in consumption levels at the bottom.