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Income Inequality Increasing Dramatically... in the NFL

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This Sunday, while taking the field, professional footballer players have one more thing to worry about in addition to executing game plans and banging heads with bull-necked opponents: rising income inequality!

Dr. Mark Perry, a professor of economics and finance at the University of Michigan, recently put together a nifty report comparing the income distribution for players in the National Football League (NFL) to the income distribution for the entire U.S. population.

The economist found that the average share of NFL payrolls going to the highest-paid 20 percent of players in 2009 was 62.4 percent, higher than the 59.5 percent share in 2008, and much higher than the 56.3 percent in 2000.

In other words, says Perry, there is significantly greater income inequality in the NFL than in the general U.S. population, with 62.4 percent of team payrolls going to the top fifth of NFL players in 2009, compared to 50.3 percent of total national income going the top quintile of American households.

While the share of income going to the top 20 percent of U.S. households has been constant for more than a decade, payroll inequality in the NFL keeps increasing each year.

Lessons to be learned?

One, says Perry, is that rising income inequality in the NFL has not come at the expense of either the lowest-paid or the median-paid players. The minimum NFL salary increased by almost 29 percent between 2000 and 2009 in real dollars, and the median inflation-adjusted NFL salary increased by 41 percent during that period.

“Therefore, despite rising income inequality in the NFL, all players (the lowest-paid players, players earning the median salary, and those earning the highest salaries) were better off in 2009 than in any previous year,” he says. “In the NFL, the highest-paid “rich” players get richer, and the lowest-paid “poor” players also get richer.”

Perry also includes the following chart, breaking down income distribution among all the 32 teams. Maybe our beloved – if pitiful – 49ers need to start emulating the Colts?

POSITION:  No positions in stocks mentioned.