47°F
weather icon Clear

US income inequality at highest level in 50 years, Census says

ORLANDO, Fla. — The gap between the haves and have-nots in the United States grew last year to its highest level in more than 50 years of tracking income inequality, according to U.S. Census Bureau figures released Thursday.

Income inequality in the United States expanded from 2017 to 2018, with several heartland states among the leaders of the increase, even though several wealthy coastal states still had the most inequality overall, according to the figures.

The nation’s Gini Index, which measures income inequality, has been rising steadily over the past five decades.

The Gini Index grew from 0.482 in 2017 to 0.485 last year, according to the bureau’s one-year American Community Survey data. The Gini Index is on a scale of 0 to 1; a score of “0” indicates perfect equality, while a score of 1 indicates perfect inequality, where one household has all the income.

The increase in income inequality comes as two Democratic presidential candidates, U.S. Sens. Bernie Sanders and Elizabeth Warren, are pitching a “wealth tax” on the nation’s richest citizens as a way to reduce wealth disparities.

Median income almost $62K

The inequality expansion last year took place at the same time median household income nationwide increased to almost $62,000, the highest ever measured by the American Community Survey. But the 0.8% income increase from 2017 to 2018 was much smaller compared to increases in the previous three years, according to the bureau.

Even though household income increased, it was distributed unevenly, with the wealthiest helped possibly by a tax cut passed by Congress in 2017, said Hector Sandoval, an economist at the University of Florida.

“In 2018, the unemployment rate was already low, and the labor market was getting tight, resulting in higher wages. This can explain the increase in the median household income,” Sandoval said. “However, the increase in the Gini index shows that the distribution became more unequal. That is, top income earners got even larger increases in their income, and one of the reasons for that might well be the tax cut.”

Boomers vs. Millennials

A big factor in the increase in inequality has to do with two large population groups on either end of the economic spectrum, according to Sean Snaith, an economist at the University of Central Florida.

On one side, at the peak of their earnings, are baby boomers who are nearing retirement, if they haven’t already retired. On the other side are millennials and Gen Zers, who are in the early stages of their work life and have lower salaries, Snaith said.

“I would say probably the biggest factor is demographics,” he said. “A wealth tax isn’t going to fix demographics.”

The areas with the most income inequality last year were coastal regions with large amounts of wealth — the District of Columbia, New York and Connecticut — as well as areas with great poverty: Puerto Rico and Louisiana.

Utah, Alaska, Iowa, North Dakota and South Dakota had the most economic equality.

Three of the states with the biggest gains in inequality from 2017 to 2018 were places with large pockets of wealth: California, Texas and Virginia. But the other six states were primarily in the heartland: Alabama, Arkansas, Kansas, Nebraska, New Hampshire and New Mexico.

A variety of factors were at play, from a slowdown in agricultural trade and manufacturing to wages that haven’t caught up with other forms of income, economists say.

Stagnant wages a factor

While some states have raised the minimum wage, other states such as Kansas haven’t. At the same time, the sustained economic growth from the recession a decade ago has enriched people who own stocks, property and other assets, and have sources of income other than wages, said Donna Ginther, an economist at the University of Kansas.

“We’ve had a period of sustained economic growth, and there are winners and losers. The winners tend to be at the top,” Ginther said. “Even though we are at full employment, wages really haven’t gone up much in the recovery.”

Don't miss the big stories. Like us on Facebook.
THE LATEST
100K evacuated as 80 mph winds whip California fires

Forecasts called for Santa Ana winds up to 50 to 80 mph at times over much of Southern California, with some of the strongest gusts howling through Orange County, where two blazes sped through brushy hills near major urban centers.

Barrett sworn in as newest Supreme Court justice

Amy Coney Barrett was sworn in on Monday as the latest justice of the United States Supreme Court, the fifth woman to serve on the bench and President Trump’s third appointment.

60K to evacuate after Southern California blaze grows

A fast-moving wildfire has forced evacuations for 60,000 people in Southern California as powerful winds across the state prompted power to be cut to hundreds of thousands to prevent utility equipment from sparking new blazes.

Mike Pence’s top aide tests positive for coronavirus

A spokesman says Vice President Mike Pence will continue with his aggressive campaign schedule after his chief of staff, Marc Short, tested positive for the coronavirus Saturday.

Murkowski backs Barrett as confirmation vote looms

Supreme Court nominee Amy Coney Barrett won crucial backing Saturday when one of the last Republican holdouts against filling the seat during an election season announced support for President Donald Trump’s pick ahead of a confirmation vote expected Monday.

60,000 travelers arrive in Hawaii with pre-travel testing

Hawaii had about 60,000 travelers arrive in the islands in the first week of its pre-travel coronavirus testing program, a state effort to get the tourism-based economy moving again amid the pandemic.

FDA approves remdesivir to treat COVID-19

U.S. regulators on Thursday approved the first drug to treat COVID-19: remdesivir, an antiviral medicine given to hospitalized patients through an IV.

Slain Utah student’s family receives $13.5M settlement

The parents of a University of Utah track athlete who was killed by her ex-boyfriend on campus two years ago reached a $13.5 million settlement Thursday with the university, which acknowledged that it didn’t handle the woman’s case properly.

Fatal shooting causes closure of Interstate 15 in California

A California Highway Patrol officer was wounded and a stolen-car suspect was killed in a gun battle at the end of a pursuit on a highway northeast of Los Angeles on Thursday, authorities said.