US income inequality jumps to the highest level ever recorded

   A man looks at employment opportunities at a job center in San Francisco, California, USA, February 4, 2010. REUTERS / Robert Galbraith / File Photo Thomson Reuters

  • Income inequality in the United States last year reached its highest level on more than half a century.
  • While the economy has steadily expanded over the last decade, it has disproportionately benefited some of the wealthiest Americans.
  • In February, Federal Reserve Chairman Jay Powell said income inequality would be one of the biggest challenges for the United States over the next decade.
  • Visit the Business Insider homepage for more stories.

Last year, income inequality reached its highest level in more than half a century, as a record-breaking economic expansion continued to disproportionately benefit some of the wealthiest Americans.

A key asset allocation target jumped to 0.485 in 201[ads1]8, the Census Bureau said Thursday, the highest reading since the so-called Gini index was launched in 1967. The meter, which uses a scale of 0 to 1, stood at 0.482 the year before.

Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia saw income inequality increase significantly last year. Washington, DC and Puerto Rico saw the highest Gini index readings, while Utah was among the lowest.

Real median household income rose 0.8%, to $ 61,937, in 2018, slightly less than in the previous three years, the Census Bureau said. The economy has expanded steadily over the last decade, which has helped push unemployment to historic lows.

But a majority of the growth has gone to revenue holders and owners of financial instruments, says Timothy Smeeding, a professor at the University of Wisconsin in Madison who studies poverty and economic mobility.

"Wages remain low, there is a lack of childcare for single-parent families, and so forth. Work alone does not solve poverty – unless wages and income pick up substantially," he said. "It still takes state aid for families with children and others who do not earn enough, despite working 40 plus hours a week."

Jay Powell, chairman of the Federal Reserve, has reiterated concerns about economic mobility in the United States. In February, he said that income inequality would be one of the biggest challenges the United States faces over the next decade.

"We want wealth to be shared widely," Powell said. "We need politics to get it done."

 Screen Shot 2019 09 27 at 11.03.08 AM Census Bureau

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