- Income inequality in the US reached its highest level in more than half a century last year.
- While the economy has expanded steadily over the last decade, it has disproportionately benefited some of the wealthiest Americans.
- In February, Federal Reserve Chairman Jay Powell said that income inequality would be one of the biggest challenges for the US over the next decade.
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Income inequality reached its highest level in more than half a century last year, as a record-long economic expansion continued to disproportionately benefit some of the wealthiest Americans.
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.
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 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.”