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FEBRUARY 7, 2020

6 facts about economic inequality inthe U.S.BY KATHERINE SCHAEFFER

Houses in Naples, Florida. (Jeffrey Greenberg/Education Images/Universal Images Group via Getty Images)

Rising economic inequality in the United States has become a central issue in the race forthe Democratic presidential nomination, and discussions about policy interventions thatmight help address it are likely to remain at the forefront in the 2020 general election.

As these debates continue, here are some basic facts about how economic inequality haschanged over time and how the U.S. compares globally.

How we did this

Over the past 50years, the highest-

earning 20% of U.S.households have steadilybrought in a larger shareof the country’s totalincome. In 2018,households in the top fifth ofearners (with incomes of$130,001 or more that year)brought in 52% of all U.S.income, more than the lowerfour-fifths combined,according to Census Bureaudata.

In 1968, by comparison, thetop-earning 20% ofhouseholds brought in 43%of the nation’s income, whilethose in the lower fourincome quintiles accounted for 56%.

Among the top 5% of households – those with incomes of at least $248,729 in 2018 – theirshare of all U.S. income rose from 16% in 1968 to 23% in 2018.

Income inequality in the U.S. is the highest of allthe G7 nations, according to data from the

Organization for Economic Cooperation andDevelopment. To compare income inequality acrosscountries, the OECD uses the Gini coefficient, a commonlyused measure ranging from 0, or perfect equality, to 1, orcomplete inequality. In 2017, the U.S. had a Gini coefficientof 0.434. In the other G7 nations, the Gini ranged from0.326 in France to 0.392 in the UK.

Globally, the Gini ranges from lows of about 0.25 in someEastern European countries to highs of 0.5 to 0.6 incountries in southern Africa, according to World Bankestimates.

The black-white income gap in the U.S. haspersisted over time. The difference

in median household incomes betweenwhite and black Americans has grown fromabout $23,800 in 1970 to roughly $33,000in 2018 (as measured in 2018 dollars).Median black household income was 61% ofmedian white household income in 2018, upmodestly from 56% in 1970 – but downslightly from 63% in 2007, before the GreatRecession, according to Current PopulationSurvey data.

Overall, 61% of Americans saythere is too much economic

inequality in the country today, butviews differ by political party andhousehold income level. AmongRepublicans and those who lean toward theGOP, 41% say there is too much inequalityin the U.S., compared with 78% ofDemocrats and Democratic leaners, a PewResearch Center survey conducted in September 2019 found.

Across income groups, U.S. adults are aboutequally likely to say there is too mucheconomic inequality. But upper- (27%) andmiddle-income Americans (26%) are morelikely than those with lower incomes (17%)to say that there is about the right amountof economic inequality.

These views also vary by income within thetwo party coalitions. Lower-incomeRepublicans are more likely than upper-income ones to say there’s too muchinequality in the country today (48% vs.34%). Among Democrats, the reverse istrue: 93% at upper-income levels say thereis too much inequality, compared with 65% of lower-income Democrats.

The wealth gapbetween America’s

richest and poorerfamilies more thandoubled from 1989 to2016, according to a recentanalysis by the Center.Another way of measuringinequality is to look athousehold wealth, alsoknown as net worth, or thevalue of assets owned by afamily, such as a home or asavings account, minusoutstanding debt, such as amortgage or student loan.

In 1989, the richest 5% offamilies had 114 times as much wealth as families in the second quintile (one tier above thelowest), at the median $2.3 million compared with $20,300. By 2016, the top 5% held 248times as much wealth at the median. (The median wealth of the poorest 20% is either zeroor negative in most years we examined.)

The richest families are also the only ones whose wealth increased in the years after thestart of the Great Recession. From 2007 to 2016, the median net worth of the top 20%increased 13%, to $1.2 million. For the top 5%, it increased by 4%, to $4.8 million. Incontrast, the median net worth of families in lower tiers of wealth decreased by at least20%. Families in the second-lowest fifth experienced a 39% loss (from $32,100 in 2007 to$19,500 in 2016).

Middle-class incomes have grown at a slower rate than upper-tier incomesover the past five decades, the same analysis found. From 1970 to 2018, the

median middle-class income increased from $58,100 to $86,600, a gain of 49%. Bycomparison, the median income for upper-tier households grew 64% over that time, from$126,100 to $207,400.

The share of American adults who live in middle-income households has decreased from61% in 1971 to 51% in 2019. During this time, the share of adults in the upper-income tierincreased from 14% to 20%, and the share in the lower-income tier increased from 25% to29%.

Topics Wealth, Poverty, Income Inequality

Katherine Schaeffer is a research analyst at Pew Research Center.

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