Income inequality widens in US, worst in 50 years

Rich and poor AMERICA

Rich and poor America: Income disparity worsens

Rich and poor America: Income disparity worsens

The gap between the richest and the poorest U.S. households is now the largest it’s been in the past 50 years — despite the median U.S. income hitting a new record in 2018, according to new data from the U.S. Census Bureau.

A key measure of wealth distribution jumped to 0.485 in 2018, the Census Bureau said Thursday, its highest reading since the so-called Gini index was started in 1967. The gauge, which uses a scale between 0 and 1, stood at 0.482 a year earlier.

Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia saw income inequality rise significantly last year.

Washington, DC and Puerto Rico saw the highest Gini index readings, while Utah was among the lowest.

The disparity grew despite a surging national economy that has seen low unemployment and more than 10 years of consecutive GDP growth.

The most troubling thing about the new report, says William M. Rodgers III, a 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 record, to lessen inequality.”

“It still takes government aid for families with children and others who do not earn enough, despite working 40 plus hours a week.

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

But in 29 states and Puerto Rico, the median household income was lower than the national level.

But a majority of growth has gone to higher income earners and the owners of financial instruments, said Timothy Smeeding, a professor at the University of Wisconsin at Madison who studies poverty and economic mobility.

“Wages remain low, there is a lack of child care for single parent families and so on. Work alone won’t solve poverty—unless wages and earnings pick up substantially,” he said.

“It still takes government aid for families with children and others who do not earn enough, despite working 40 plus hours a week.”

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

“We want prosperity to be widely shared,” Powell said. “We need policies to make that happen.”

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