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Make Me Smart with Kai and Molly

Episode 136: VC hype vs. Wall Street

Oct 22, 2019

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Marketplace Tech

New census data shows inequality continues to grow in the U.S.

Erika Beras Sep 26, 2019
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The Census Bureau has just released the latest American Community Survey, a sort of annual mini-census based on data from a quarter million homes.

The 2018 data released this morning shows that income inequality is on the rise.

The survey found that median household income increased 0.8% between 2017 and 2018, to nearly $62,000 — the highest figure in the survey’s history.

According to Christine Percheski, a sociologist and demographer at Northwestern University, the uptick in median income isn’t surprising. 

“We see relatively low unemployment rates in many places,” she said. “And so many households are doing better than they were, certainly during the Great Recession, but even [compared to] a few years ago.” 

But the gains haven’t been distributed equally.

The survey includes a measure of income inequality called the Gini index: A score of zero would mean that all American households earned the same income, while a score of 1 would mean one American household earned all income.

After five years of holding more or less steady, the Gini index for 2018 increased to 0.485. Percheski says that shows a substantial level of inequality. 

The Gini Index measures the degree of income inequality: The higher the number, the more inequality. After holding steady for five years, it surged in 2018.
Source: American Community Survey, United States Census Bureau.

The survey also measure how much of total income is earned by each quintile of households, or one-fifth of the population ranked by income. 

“The lowest quintile, or the lowest[-earning] 20% of households were only bringing in 3% of all the income in the U.S.,” Percheski said. “But … the highest quintile, or the top 20% of households, brings in more than half of the income in the U.S.” 

Income inequality increased in nine states, including California. That’s a reflection of the effects of the tech boom, according to Beth Jarosz, a demographer with the nonprofit Population Reference Bureau. 

In other words, Jarosz said, the contrast between “the level of income in Silicon Valley compared to the really extraordinarily high poverty rate in a county like Imperial County, where the economy is predominantly agricultural and there often is not much work for people who live there.”

Jarosz says the same contrast may be behind increasing inequality in other states. 

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