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The gap between the richest and poorest US households is now the largest it has been in the last 50 years – despite US median income hitting a new record in 2018, according to new data from the US Census Bureau.
The US income inequality was "significantly higher" in 2018 than in 2017, the federal agency said in its latest report from the American Community Survey. The last time a change in the calculation was considered statistically significant was when it grew from 2012-2013.
While many states did not see a change in income inequality last year, the income gap grew wider in nine states: Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia.
The disparity grew despite a growing national economy that has had low unemployment and more than 10 years of subsequent GDP growth.
The most troubling thing about the new report, says William M. Rodgers III, professor of public policy and chief economist at the Heldrich Center at Rutgers University, is that it "clearly illustrates the inability of the current economic expansion, the longest on the record. , to reduce inequality. "
Asked why the rising economic tide has raised some boats more than others, Rodgers lists several factors, including the decline in organized labor and competition for jobs from abroad. He also cites tax policies that favor businesses and families with higher incomes.
The income inequality is measured through the Gini index, which measures how far the income is apart. To do so, the index assigns a hypothetical score of 0.0 to a population where the income is distributed evenly and a score of 1.0 to a population where only one household receives all the income.
In the United States, the Gini index figure has remained steady in recent years. But it moved from 0.482 in 2017 to 0.485 in 2018. Although that change may seem small, it is statistically significant, the Census Bureau said. The agency notes that back in 2006, the figure was 0.464.
The Census Bureau states that five states – California, Connecticut, Florida, Louisiana and New York – and the District of Columbia and Puerto Rico had higher inequality than the rest of the United States in 2018. Of that group, California is the only state that saw the revenue gap grow even bigger last year.
median household income has never been higher, reaching $ 61,937 for 2018, the Census Bureau said. But in 29 states and Puerto Rico, the median household income was lower than the national level.
The report reflects some positive changes to the country's poverty rate, which fell in 14 states and Puerto Rico. And in four states – California, Florida, Georgia and North Carolina – the poverty rate fell for the fifth year in a row.
The poverty rate did not grow worse in the top 25 US cities in 2018, the Census Bureau said. And in seven of these metropolitan areas, it fell.
In some cases, Rodgers says, the reason why the poverty rate is likely to fall is because of a growing number of local and state governments that have raised the minimum wage – something the federal government hasn't done since 2009.
In the three most populous American metropolitan areas – centered on New York City, Los Angeles and Chicago – dropped the percentage of people in poverty for the fourth year in a row.