US Income Inequality Statistics to Know in 2020

Is the wealth gap in America widening? 

One thing is for sure:

The middle class in America today is worse off than their parents. 

According to US income inequality statistics, the gap of wealth is widening at the expense of the middle class. Since 1970, there have been significant shifts in the balance of wealth.

We’ll warm up with some of the latest stats:

US Income Inequality Statistics (Editor’s Choice): 

  • 41.4% of Americans are classified as low-income or low-income families.
  • The top 1% earns forty times more than the bottom 90%.
  • In 2019, the number of employed Americans rose by 267,000.
  • From 2000 to 2018, the average salary for workers in America rose only 17%.
  • Men earned an average of 22% more than women back in 2018.
  • 100 of the country’s largest private landowners control 40.2 million acres.

These following charts from the Pew Research Center highlight a worrying trend — while the lower-income groups have remained consistent with their share of the average income, middle-income families have seen their share drop by 19%.

The only group who’s done well over the last fifty years is the upper-income earners. Inequality statistics show that their share of the average income has increased by 29%. This means that a whopping 48% of income earned stateside goes to upper-income earners.  

A chart of income gap

(Image: Pew Research Center)

That raises the question, what, if anything, can we do? It’s a thorny issue. Speak to any of the wealthy 1%, and they’ll say that they worked for the money. At the same time, though, it’s not difficult to grow your wealth when you have the disposable income to do so.

In this post, we’ll go through the latest US income inequality statistics.

We’ll provide the facts, and allow you to draw your own conclusions. 

Here we go:

Income Inequality in the United States: Stats and Facts

1. Income inequality facts show that the top 1% earns forty times more than the bottom 90%.

(Source: The Nation)

In America today, the gap between the top 1% income and the bottom 90% income is widening daily. The top 1% earns, on average, more than forty times than the lower-income earners. Essentially, one person out of 100 earns 40 times more than 90 others in the group.

2. The top 0.1% of income earners own as much wealth as the bottom 90%. combined.

(Source: Politifact)

Senator Elizabeth Warren’s proposed Ultra Millionaire Tax highlighted more difficulties. The 0.1% of top income earners own the same amount of wealth as the bottom 90% combined. That is, 200 000 wealthy families own as much as 110 million regular families in America. This points to significant inequality in America.

3. 41.4% of people in America are classified as low-income or low-income families.

(Source: Fast Company )

Income inequality facts show that 41.4% of people living in America today are classified as low-income or poor families. Those qualifying as low-income families earn $28,700 a year.

4. The average income for low- and middle-class earners increased by around 140% between 1970 and 2019.

(Source: Pew Research Center)

Low and middle-class families both saw a similar increase in their basic salaries during the review period. By contrast, the US wealth distribution 2019 stats show that upper-income families earned around 164% more money over the same period. 

5. In 2015, about 46.4% of employees earning under $15 an hour were aged 35 or older.

(Source: National Employment Law Project)

Employees over thirty-five might find it challenging to improve their lot because they’re likely to have families. Those earning under $15 an hour are unlikely to be able to afford extras. They’re less likely to be able to take positive steps such as studying.

Income Inequality In America: Wage Gap and Demographics

Let’s see:      

6. The total number of Americans employed in 2019 rose by 267,000.

(Source: Trading Economics)

The number of new jobs created is a reflection of the health of the US economy. The next thing to work is addressing income disparity.

7. The number of full-time employees increased by 2,3 million between 2017 and 2018.

(Source: United States Census Bureau & Statista)

2.3 million full-time jobs were created between 2017 and 2018. The knock-on effect is a boost to the economy. PayPal statistics over the same period show a big rise in income.  Other online retailers report the same. As a bonus, 69% of those appointees were women. This shows that businesses are trying to be more inclusive of women in the workplace.

8. Those holding a master’s degree in finance earned the highest average annual salary at $125,208.

(Source: Statista)

Income distribution facts show that if you want to make good money, the finance industry is an excellent place to start. If you want to earn the best salary, start working towards your master’s degree in finance. The $125,208 annual salary quoted above is for employees around about halfway through their career.

9. The average salary for workers in America rose only 17% from 2000 to 2018.

(Source: Statista)

That’s an average of around 0.94% per annum. By contrast, the inflation rate averaged out at 1.85% over the same period. The average salary increase in America has not kept pace with inflation.

10.In 2018, around 805,000 workers in the age group of 16-24 earned minimum wage or lower.

(Source: Statista)

The first step towards ending wealth inequality in America is to start addressing the low wages earned by school leavers. Student loan debt statistics further show that graduates are desperate for work to pay off their debt. They may thus be willing to work for far lower wages than they should. 

11. The average woman in America earns 80% of what her male counterparts do today as opposed to 71.6% in 1990.

(Source: Statista)

That’s an improvement – in 1990, women earned 71.6% of what their male counterparts did. The good news is that the wage gap is slowly narrowing.

12. Asian men in America earned the highest average weekly wage at $1,280 in 2018.

(Source: Statista)

This seems to be an anomaly in equality and wealth distribution in the US. Most people believe that minorities earn significantly less. The reason for this could be the skill set of these men. Many are employed in fields where a great deal of technical skill is required.   

13. Hispanic women in America fared the worst in 2018 in terms of weekly wages.

(Source: Statista)

Hispanic or Latino women earned an average of $644 per week in 2018. This is the lowest rate for weekly wages. Part of the reason might be the immigration status of some workers. Illegals do earn less money overall. 

14. Statistically, Asian American households fared the best with a median income of $87,194 in 2018.

(Source: United States Census Bureau)

Coming in second were White Americans at $70,462. Hispanic Americans earned an average of $51,450. Black Americans fared the worst with an average income of $41,361.

15. In 2018, men earned an average of 22% more than women.

(Source: United States Census Bureau)

Men employed full-time earned an average of $55,291. By comparison, their female counterparts earned $45,097.

16. 20% of African American families stateside lived below the poverty line in 2018.

(Source: Statista)

White Americans fared much better, with only 8.1% living below the poverty line. If we look at this from the point of view of wealth, income and consumption, African Americans are more likely to feel excluded from the economy and become disenfranchised.

17. The poverty rate amongst those aged over 25 years without a high school diploma increased by 1.4% between 2017 and 2018.

(Source: United States Census Bureau)

This was the only segment of the population where the poverty rate increased. It highlights the importance of education for job seekers. This had a knock-on effect on the US wealth distribution 2018 numbers.

18. The number of Americans without health care coverage increased from 7.9% to 8.5% between 2017 and 2018.

(Source: United States Census Bureau)

Health care in the United States is expensive. Around 27.5 million Americans didn’t have any health care coverage in 2018. The high cost is considered the most common reason for the lack of health insurance stateside. 

19. The average family of four paid $20,576 for health insurance in 2019. 

(Source: Investopedia)

This would account for around about 73% of the income of a low-income family, putting healthcare out of reach for many. Inequality statistics predictions suggest that fewer families will have access to healthcare in the future because of rising costs. 

20. The unemployment rate in the United States dropped from 3.9% in 2018 to 3.5% in 2019.

(Source: United States Bureau of Labor Statistics)

The country’s unemployment is the lowest it’s been since 1969. In January 2020, the nation’s unemployment rate was little changed at 3.6, with the number of unemployed persons coming in at 5.9 million. 

21. There’s a huge disparity in America between different industries and the salaries earned.

(Source: Statista)

Inequality statistics suggest that an occupational therapist holding a master’s degree will earn around $71,087 per annum mid-career. That’s just a little over 56% of what someone holding a master’s degree in finance can expect to earn.

22. The minimum wage as laid out by the federal government in America was last increased in 2007.

(Source: NCSL)

While there has been a lot of talk in recent years about increasing the minimum wage, it’s stuck at $7.25 per hour. While this varies from state to state, 19 states stick to this minimum hourly wage. Assuming that an employee works a typical 40-hour week, they can expect to earn just $1,160 per month. That’s $13,920 per annum or 48% of the average low-income earner’s wage.

23. The District of Columbia mandates the highest minimum wage in the country.

(Source: NCSL)

The US wealth distribution 2020 statistics show that the minimum wage in the District of Columbia was $15 per hour. That’s double the federally mandated minimum. California and Washington came in second and third with rates of $14 and $13.5 per hour, respectively. 

24. 8.3% of workers in America have more than one job.

(Source: United States Census Bureau)

The latest SIPP survey, run back in 2013, states that 8.3% of workers in the United States work a second job. Of those, 6.9% worked three jobs or more. Workers opt for more than one job mainly because they don’t earn enough at their primary workplace.

Now, let’s ask an important question before we go on:

Why is income inequality a problem?              

Studies have shown that the effects of inequality include:

More Social Issues

Those earning lower incomes might feel that they have to resort to crime to support themselves. They might also be more likely to start protest action, such as strikes which have a negative effect on the economy. Human capital inequality is bound to cause resentment towards high-income earners.

More Health Issues

Those in the lower-income groups may not have the money for health insurance. Even if they do have health insurance, they might not want to lose a day’s wages to go off sick. Those without health insurance might miss out on critical care because they can’t afford healthcare. Being unable to work increases the wealth gap even more.

A Reduction in Economic Activity

If 60% of your population is living below the breadline, the economy suffers. Your propensity to spend directly correlates with the amount of disposable income you have. Low-income families don’t have the disposable income to waste money. They’re less likely to buy more than the basics. They’re also not able to afford the education that might help them secure better-paid work.

Reduced Access to Upskilling Opportunities

Citizens who are battling to make ends meet are less able to access programs to upskill themselves. This, in turn, lowers the supply of skilled labor in the country. 

Lower Life Expectancy Rates

Inequality reduces the overall life expectancy in a country. Low-income families may not have access to healthy food. They’re also more likely to suffer from stress. Finally, because they don’t have the same access to healthcare, their life expectancy is reduced.

Reduced Labor Market Flexibility

The workplace has been evolving rapidly, thanks to advances in technology. Employees must learn to adapt in order to survive. Unfortunately, this often means having to be retrained. Low-income earners are less likely to have the resources or the time for this.

The combination of these factors impacts the overall economy. You’re in a situation where employees are walking wounded. In other words, they can’t perform at peak efficiency. The employees are also likely to be less motivated and could be distracted by personal issues. They simply can’t perform at the same level as someone earning a decent wage.

The history of wealth inequality shows that low-income earners are less likely to break the cycle of poverty. Children growing up in these circumstances may perpetuate this cycle because they don’t have the resources to better their circumstances.

Now, let’s move on. 

We have more stats coming up:

Wealth Inequality: Trends and Predictions

Are the rich getting richer in 2020? 

Let’s see what statistics has to say:

25. The top 20% own 77% of the wealth in America.

(Source: Brookings)

The middle classes own less than a third of that at 21%. The low-income group comes in at just 2% of assets held. This marks a distinct shift since 1995 when the middle class owned the most wealth of all groups.

26. 90% of shares in America are owned by the wealthiest 10%.

(Source: New York Times)

It’s this disproportionate distribution of shares that could account for the top 10% recovering faster after the sub-prime crisis in 2008. Once the market started recovering, the share prices increased, allowing the investors to recoup their losses. The wealthy tend to have greater equity in terms of shares and assets. They can use that when times are tough.  

27. To be counted amongst the top 5 percent income earners in 2017, you’d have to have earned at least $299,810.

(Source: Economic Policy Institute)

This stat further underscores the huge disparity in income. This is around six times higher than the average wage in the country. 

28. Inequality in household income, as measured by the Gini-coefficient, increased by 5 points between 1944 and 2018.

(Source: United Nations World Income Inequality Database)

The Gini-coefficient measures wealth distribution and income inequality in an economy. A zero-rating is indicative of a society where everyone earns the same and has the same level of wealth. The higher the number, the more unequal the society.

According to statistics related to the history of wealth inequality, America’s score increased from 43.6 in 1944 to 48.6 in 2018. This points to the growing disparity between top earners and the rest of the population.  

29. Slovenia is the country with the best income equality in 2018.

(Source: United Nations World Income Inequality Database)

Wealth inequality in the world varies significantly according to country. Slovenia has the lowest rate of income inequality, as rated by the Gini-coefficient. The country scored 23.4 points, which is less than half of America’s score for the same year. 

30. The average hourly wage for employees in America in 2019 was $10.96.

(Source: Statista)

Employees in America earned just $0.07 more per hour on average between 2018 and 2019. For someone working a standard forty-hour week, that represents an increase of just $11.20 per month. From this point of view, the wealth inequality in America 2019 statistics make more sense. Here we see that there’s a little extra every year to build wealth.

31. The poverty rate in the United States is the lowest it’s been since 2002.

(Source: Statista)

The poverty rate has been in decline since 2010. It’s currently at 11.8%. That’s a 3.3% reduction since the last high in 2010. In this study, the poverty line is considered to be those earning 8% of the country’s overall income. The improvement is an encouraging sign, but we must do more. 

32. In 2017, the United States ranked second after Israel in terms of poverty rates in OECD countries.

(Source: Statista)

Compared to other OECD countries, the US doesn’t do quite as well in terms of those living below the poverty line. In this study, the poverty line is worked out as half the median income for the country. Income and wealth inequality in the US makes this the pressing issue of our time. 

33. In 2018, the average income for a household in the United States was $63,179.

(Source: United States Census Bureau)

The median income per household has not changed significantly from the year before. The real median figure showed an increase of 2.4% in income between 2017 and 2018.

Top 1 Income: What Percentage Of American Wealth Is Held By The Top 1?

34. 100 of the country’s largest private landowners control 40.2 million acres.

(Source: The Washington Post)

That’s a drop in the bucket compared to how much land the government owns, but it’s an interesting statistic regardless. That’s an average of 402,000 acres for each big landowner and a 50% increase in the last decade. Changing attitudes about the accumulation of capital and land as an asset class is thought to have fueled this growth.  

35. The average one-percenter in America earned $1,316,985 per annum in 2015.

(Source: The Economic Policy Institute)

This is a stark contrast to the average income of the rest of the population. In 2015, the average person in the bottom 99% earned $50,107 per annum. 

36. Connecticut’s 1-percenters earned the highest annual average income at $2,522,806 in 2015.

(Source: The Economic Policy Institute)

US income distribution statistics in the report show that Connecticut also has one of the largest concentrations of one-one-percenters in the country. In contrast, the other 99% of people in Connecticut earned an average of $67,742 per annum. 

37. West Virginia’s 1-percenters earned the lowest annual average income at $535,648 per annum.

(Source: The Economic Policy Institute)

West Virginia is also one of the states with the smallest concentrations of the nation’s top 1 percent incomes. The rest of the population in the state meanwhile earned an average of $34,987 in 2015. 

38. 64.8% of Americans own their own homes.

(Source: Statista)

64.8% of Americans do own their own homes. While homeownership in the country saw a decline on account of the housing market meltdown during the financial crisis, it has since 2016 picked up again. 

39. 37% of Americans own their houses outright.

(Source: Bloomberg)

It appears that Americans value the idea of owning their own homes. In 2018, more than a third had repaid their mortgages in full. Experts on wealth distribution in the US see this as a positive sign. 

40. The total value of housing debt in America stood at $10.52 trillion in 2019.

(Source: Statista)

This figure has been steadily rising since 2012, indicating that the housing market has overcome the devaluation precipitated by the subprime lending scandal of 2008.

41. House foreclosures in America account for just 0.47% of mortgages.

(Source: Statista)

The rate of foreclosures stateside in 2018 could indicate the strength of the economy. Less than 1% of financed houses were foreclosed on in 2018. The low number of foreclosures, as evidenced by the latest mortgage statistics, bodes well for those fighting economic inequality.

42. America currently ranks in the top position globally in terms of its gross domestic product (GDP).

(Source: Statista)

America takes the top spot with a healthy GDP of $21,439.45 trillion in 2019. China comes in second at $14,140.16 trillion. 

43. The country’s GDP grew by 2.9% in 2018.

(Source: Statista)

The country saw its GDP grow by 2.9% in 2018. Before we open the champaign though, it must be noted that inflation rose by 2.4% in the same year. This inflationary pressure would have had a negative impact on the GDP gains, but growth still outstripped inflation. 

44. According to the Federal Reserve, Americans owned a total of $98 trillion in assets in 2018.

(Source: The Federal Reserve)

If all these assets were divided up equally amongst the population, each person in the country would get around $343,000. While it seems that there’s plenty to go around, the distribution of wealth in America remains a thorny issue.

45. Employees in the District of Columbia earned the nation’s highest average wage in 2017.

(Source: Statista)

Workers in the District of Columbia earned an average of $85,000 in 2017, the highest in the country. The higher earnings are largely a result of the state housing the country’s capital, Washington, D.C.  The cost of living in the state is proportionally higher than the cost of living in most states.

46. The federal government owns 28% of the land in America.

(Source: Congressional Research Service)

There are roughly 2.27 billion acres of land in America. In 2017, the federal government’s portion of that totaled 640 million acres. Private land ownership accounts for the rest. Federal ownership varies from state to state.

Connecticut and Iowa have the most privately owned land, with 99.7% in private hands. Nevada went the other way, with 79.6% of the land federally owned. 

47. 46% of millennials paid for their studies with student loans in 2016.

(Source: Stanford University)

According to statistics about U.S. wealth distribution 2016, this marks a 6% increase over Generation X’s student loan requirements in 2000. What’s concerning is that the average loan amount over the same period increased by $2,000. Given the ever-widening income inequality, this shows a worrying trend. School leavers are taking on debt that, ultimately, doesn’t necessarily result in better placements in the workforce.

In Conclusion

The wealth gap in America is clearly widening. 

Inflationary pressures are eroding the power of the dollar. 

The wealthy have an asset base that allows their earnings to outpace inflation.

Lower to middle-income families don’t have the same luxury. Consumer spending statistics indicate that lower-income families are under increasing pressure to provide basic essentials. As inflationary pressures continue to mount, these families are less able to improve their lot. 

Unless something is done about this, we could see the American economy negatively impacted. The country has been doing well over the last few years, but the gains haven’t been filtered down to the workforce underpinning the economy. Fairness vs. equality models show that America is failing on both counts.

If not addressed, this will lead to decreased spending and a concurrent growth slowdown. This, in turn, will result in job losses and further financial distress. Eventually, this negative growth will lead to another depression.

You now know a lot more about US income inequality statistics. Have you got ideas on how to redress the imbalances? Let us know in the comments.

FAQ

Q: What is wealth inequality and why does it matter?

A: Wealth inequality is distinct from income inequality. Wealth refers to assets that you own. You could earn a million dollars a year, but if you have no assets, you’re not wealthy. Why? Assets can increase the amount of income you earn. If you were to stop working tomorrow, your investments like stocks, property, and so on could still provide you with an income.

Over time, the more income you earn, the more you can invest. Your investments, in turn, provide a safety net in uncertain times.  Progressive taxation measures can alleviate financial burdens for low-income earners. What they can’t do, however, is make much difference to how much wealth this group can build for themselves. 

Q: Why has income inequality increased in the US?

A: Income inequality in the U.S. has increased in part because wage increases have not kept pace with inflation. With every year that passes, spending power erodes. For low-income earners, this means dealing with less disposable income on an annual basis.

Globalization has further impacted low-income workers. Companies find it less expensive to outsource labor, and so more employees at home are out of work. 

The financial crisis in 2008 also gave the wealthy a significant advantage and contributed to global inequality. In the US, low to middle-income families might have been forced to sell their assets to keep their heads above water. The wealthy, by contrast, have diversified portfolios of assets.

They also lost money during the crisis, but because of their large asset bases, were able to weather the storm. The wealthy would have been able to draw on income from rental properties and dividends from stocks to stay afloat instead of having to sell off all of their assets.

Another potential issue is that programs to improve the situation focus on immediate benefits rather than on the principles of equality of opportunity. This means equal opportunities for everyone to better themselves. It works in theory, but how practical is it?

Take, for example, movements towards creating a more equitable solution for women in the workplace.

Despite the fact that we’ve been working on the issue of gender inequality for decades now, not much has changed. Women are now provided with better opportunities, but can they take advantage of them?

With equality of outcome approach, the focus is on equalizing the end results. In other words, women would receive the same pay as men. 

Q: What percentage of American wealth is held by the top 1?

A: According to the Washington Post, the top 1% holds 40% of the wealth in the country. This is the highest percentage that they’ve owned since 1962.

Q: How does the US measure income inequality?

A: Researchers may use several statistical models to determine. The most commonly used metrics are:

  •         The Gini-coefficient – also referred to as the Gini Index
  •         The Hoover Index
  •         The Theil Index

These models combine a range of different factors, such as income, expenditure, demographics, asset ownership, geographic location, and so on, to allow for preparing more accurate US income inequality statistics.

See you around, on SpendMeNot.com, everybody!

Sources:

 

  1. The Nation
  2. Politifact
  3. Fast Company
  4. Pew Research Center
  5. National Employment Law Project
  6. Trading Economics
  7. United States Census Bureau & Statista
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  14. United States Census Bureau
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  19. Investopedia
  20. United States Bureau of Labor Statistics
  21. Statista
  22. NCSL
  23. NCSL
  24. United States Census Bureau
  25. Brookings
  26. New York Times
  27. The Economic Policy Institute
  28. United Nations World Income Inequality Database
  29. United Nations World Income Inequality Database
  30. Statista
  31. Statista
  32. Statista
  33. United States Census Bureau
  34. The Washington Post
  35. The Economic Policy Institute
  36. The Economic Policy Institute
  37. The Economic Policy Institute
  38. Statista
  39. Bloomberg
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  43. Statista  & Statista
  44. The United States Federal Reserve
  45. Statista
  46. Congressional Research Service
  47. Stanford University

 

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