In America, all the top 1% see are dollar signs. Everyone else...not so much.
Annnnd why is that again?
Income and wealth inequality in the US have been creeping up for decades. In 2018, income inequality hit a 50-year high. It’s measured by something called the Gini Index. A score of 0 represents a population where incomes are perfectly evenly distributed. A score of 1 represents a population where one household gets all the money. In 2018, the number was 0.485.
Help me put that number in context please.
For reference, when the Census Bureau first started using the Gini Index in 1967, the US’s score was 0.397. The wealth gap in the US is even starker – the top 10% of Americans now control 70% of the country’s wealth. That’s up from about 60% in the late 1980s. Basically the richest Americans continue to control more of the country’s wealth, while everyone else controls less of it. No other wealthy developed nation has comparable rates of inequality.
Cool cool. What about the economy? Isn’t it doing well?
Yes. As of July 2019, the economy was in its longest economic expansion ever. Unemployment is at a 50-year low and the poverty rate has fallen every year for the past few years. But the income and wealth gaps persist.
There are a lot of different factors.
Decline in housing wealth. Millions of Americans lost homes during and after the Great Recession in 2008. And home prices have shot up since then. That means 1: fewer middle-class Americans own homes and can’t afford to jump into the housing market. Especially black Americans. And 2: wealthier homeowners have even more wealth thanks to increased home values.
The stock market. Fewer middle-income Americans own stock than before the recession. The Federal Reserve says this is because more of them took jobs that didn’t offer retirement plans. Student loan debt and high health care costs also kept people from investing or saving for retirement. Aka even though the stock market is so hot right now, many middle-class Americans aren’t in on the action.
We get into the other factors, how inequality breaks down along racial lines, and its impact on everything from education to politics to health, in theSkimm app. Every week, the app goes deep on a different news topic to give you the context you need to understand what's going on in the world. Download the app now and you get the first week free.