U.S. income inequality grew in 2021 for the first time in a decade, according to data the Census Bureau released in September 2022. That might sound surprising, since the most accurate measure of the poverty rate declined during the same time span. But for development experts like me, this apparent contradiction makes perfect sense.
That’s because what’s been driving income inequality in the United States—and around the world for years—is that the very rich are getting even richer, rather than the poor getting poorer. Brett Arends: One reason the rich get richer In every major region of the world outside of Europe, extreme wealth is becoming concentrated in just a handful of people.
Gini index Economists and other experts track the gap between the rich and the poor with what’s known as the Gini index or coefficient. This common measure of income inequality is calculated by assessing the relative share of national income received by proportions of the population. In a society with perfect equality—meaning everyone receives an equal share of the pie—the Gini coefficient would be 0. In the most unequal society conceivably possible, where a single person hoarded every penny of that nation’s wealth, the Gini coefficient would be 1. The Gini index rose by 1.2% in the U.S. in 2021 to 0.494 from 0.488 a year earlier, the Census found. In many other countries, by contrast, the Gini has been declining even as the COVID-19 pandemic—and the deep recession and weak economic recovery it triggered—worsened global income inequality. Inequality tends to be greater in developing countries than wealthier ones. The United States is an exception. The U.S. Gini coefficient is much higher than in similar economies, such as Denmark, which had a Gini coefficient of 0.28 in 2019, and France, where it stood at 0.32 in 2018, according to the World Bank.
In 2021, the richest 1% of Americans owned 34.9% of the country’s wealth, while average Americans in the bottom half had only $12,065—less money than their counterparts in other industrial nations. By comparison, the richest 1% in the United Kingdom and Germany owned only 22.6% and 18.6% of their country’s wealth, respectively. Globally, the richest 10% of people now possess nearly 76% of the world’s wealth. Meanwhile, the bottom 50% own just 2%, according to the 2022 World Inequality Report, which analyzes data and the work of more than 100 researchers and inequality experts.Drivers of extreme income and …