Headlines and Excerpts:

Census: US inequality grew, including in heartland states by Mike Schneider/AP News September 26, 2019

“The gap between the haves and have-nots in the United States grew last year to its highest level in more than 50 years of tracking income inequality, according to U.S. Census Bureau figures released Thursday…The nation’s Gini Index, which measures income inequality, has been rising steadily over the past five decades.”

U.S. Income Inequality Worsens, Widening To A New Gap Bill Chappell/NPR September 26, 2019

 “The gap between the richest and the poorest U.S. households is now the largest it's been in the past 50 years…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.’."

The income inequality crisis that wasn’t by Brad Polumbo/Washington Examiner September 10, 2019*

“…new data show the liberal narrative surrounding income inequality has been exaggerated and is unfounded. The U.S. Census Bureau just released new statistics which show that the Gini coefficient, a common measure of income inequality, has hardly changed in the last 25 years.”

What the US Census Bureau Press Release Actually Says:

American Community Survey [ACS] Provides New State and Local Income, Poverty and Health Insurance Statistics September 26, 2019. To quote:

  • The Gini index is a standard economic measure of income inequality. A score of 0.0 is perfect equality in income distribution. A score of 1.0 indicates total inequality, where one household has all of the income.

  • The Gini index for the United States in the 2018 ACS (0.485) was significantly higher than the 2017 ACS estimate [.482]. Five states (California, Connecticut, Florida, Louisiana and New York), the District of Columbia and Puerto Rico had Gini indices higher than the United States, and 36 states were lower.

  • Most states experienced no statistical change in income inequality. Income inequality increased in nine states: Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia. 

Context and Comments:

From the same US Census Bureau press release, to quote:

  • The 2018 median household income was the highest measured by the ACS.

  • Median household income increased in 10 of the 25 most populous metropolitan areas between 2017 and 2018. None of those 25 metropolitan areas experienced a statistically significant decrease.

  • From 2017 to 2018, the poverty rate declined in 14 states and Puerto Rico. In 2018, the poverty rate increased in only one state: Connecticut.

  • None of the most populous metropolitan statistical areas experienced a poverty rate increase in 2018.

The Gini Index measures the spread of household incomes in a given year. However, most US households change income ranking across time. Who’s near the bottom or top one year may very well see their fortunes rise or fall the next year. For instance, roughly half the households that manage to earn at least a million only do so for a year. In other words, the “haves and have-nots” are not necessarily the same people from year to year.

Also, while the .003 increase in the Gini Index was statistically significant, it is relatively trivial and does not contradict the long-term trend: the US Gini Coefficient has been pretty flat since 2011:

_2019 US Gini Coefficient 1990-2017.png

None of this is to say we shouldn’t work hard to decrease poverty and increase social mobility. But exaggerating problems doesn’t help fix them. More likely, it leads to ill-considered policies that ending up doing more harm than good.

* The September 26 press release was based on data released on September 10, so the Washington Examiner is referring to the same Census Bureau data.