US Income Inequality Hits Highest In 50 Years, NYC And California Have Biggest Gap – By Kalyan Kumar (IB Times) / Sept 26 2019
Income inequality in the United States has zoomed to its highest level in 50 years ago, per new data by Census Bureau.
The income divide was stark in wealthy coastal states including New York, Connecticut, and Washington, D.C and also in areas with relatively high poverty, such as Puerto Rico and Louisiana.
The Gini index metric tracks wealth distribution across a population with zero standing for total equality and 1 for total inequality. In the U.S, the Gini index has been rising since 1967. From 0.397 in 1967, the Gini index soared to 0.485 in 2018.
Income inequality starkly widened in nine states from 2017 to 2018 during the time the nation had its longest economic expansion for more than a decade.
Heartland states California, Alabama, Arkansas, Kansas, Nebraska, New Mexico, New Hampshire, Texas, and Virginia led the growth in the income divide.
But income equality was the highest in Alaska, Utah, and Iowa.
The glaring income inequality came despite the nation’s poverty and unemployment rates staying at historic lows. The U.S. population now stands at 329,064,917 people per UN data.
The contradiction of growth and income divide
The surge in inequality expansion from 2017 to 2018 happened despite the median household income surging to almost $62,000 in 2018. That was the highest ever per the American Community Survey.
But the household income expansion was distributed unevenly. The wealthiest was helped by the Trump tax cuts in 2017, noted Hector Sandoval, an economist at the University of Florida.
The corporate tax cuts had made big Trump news as a path-breaking approach to create more jobs.
However, Brielle Bryan, an assistant professor of sociology at Rice University blames the stagnant federal minimum wage at $7.25 for the issue.
“Inequality will go up as long as the people at the top of the tail are seeing their wealth increase. A booming economy means people with have higher income and own capital see continued higher returns on that,” Bryan said.
According to studies, the net worth of U.S. households and non-profit organizations was $94.7 trillion in the first quarter of 2017 and was a record. If shared equally among 124 million U.S. households, this must be $760,000 per family. But 62 million American households, that is the bottom 50 percent of families average $11,000 net worth.
US President Donald Trump holds a press conference after taking part in the UN General Assembly Photo: AFP / SAUL LOEB
The US GDP per capita is put at 62, 641 in 2018 per World Bank data. It is held that the difference in U.S. median and mean wealth per adult is more than 600 percent.
Meanwhile, the income outlook of Americans based on U.S. GDP growth could spell additional pressure. The U.S. economy grew slower in the second quarter, per updated figures. The slow pace will continue until the end of the year because of the trade war with China.
Economists surveyed by MarketWatch said the U.S GDP will grow 2 percent in each of the last two quarters of 2019. But the reign of the strong US dollar in foreign-exchange markets indicates the expansion of the U.S. economy.
