Year | U.S. Gini coefficient |
2023 | 0.485 |
2022 | 0.489 |
2021 | 0.494 |
2020 | 0.488 |
Last week’s Bureau of Economic Analysis calculations report that, since 2020, the U.S. economy has “grown” from $21.3 trillion to about $29.0 trillion this year, with “wages and compensation” making up about half of the total growth. Discounting inflation, the U.S. economy of 2024 is about $3.2 trillion larger than that of 2020, and incomes — workers, executives, farmers, self-employed, etc. — perhaps $2 trillion more. Who is making all this extra money? BEA gives you lots of ways to divide it, but one heartening point: with income inequality diminishing in 2022 and 2023, low-income and “working” families are getting a bit more of it than they were before.
As a point of departure, the “Gini coefficient,” devised by Venetian statistician Corrado Gini in 1912 (see more below on this unlovable person), provides a widely used measure of income equality. The “coefficient” runs from 0.000 to 1.000. At the theoretical 0.000 extreme, every clone-like individual (or every household, depending on what you’re measuring) would make exactly the same amount of money. The other end, 1.000, represents a Pharaoh-like state in which one single person gets every nickel. No country is especially close to either 0 or 1, but the U.S. shows up on the “more unequal” side. World Bank data for high-income countries, for example, finds only Chile and Panama with more “unequal divisions of income.” Here’s a representative sample of countries from their list (using only countries for the Bank has results for 2020 r more recent years), bracketed by Colombia at the “most income-unequal” end of the spectrum and Slovakia as “most equal”:
Country | Gini coefficient |
Colombia | 0.548 |
Brazil | 0.520 |
Zimbabwe | 0.503 |
Costa Rica | 0.467 |
United States | 0.413 |
China | 0.357 |
Thailand | 0.349 |
Australia | 0.343 |
United Kingdom | 0.329 |
Germany | 0.324 |
India | 0.328 |
Canada | 0.317 |
Denmark | 0.283 |
Netherlands | 0.257 |
Slovakia | 0.234 |
This placing for the U.S. in 2022 reflects the end-point of a longstanding trend, in which American incomes have been growing apart for about five decades. (Or, more precisely, the top end has been stretching up, relative especially to the bottom tiers.) Census records, which use a different approach than the Bank’s but find similar outcomes, put America’s Gini coefficient at 0.397 in 1967, then a slightly higher 0.403 in 1980, 0.462 in 2000, 0.481 in 2016, and 0.494 in 2021. In more real-world terms (with numbers adjusted for inflation), here’s how the Census sees family incomes changing from 2000 to 2021:
Income Group | Income 2020 | Income 2021 | Growth |
Top 20% | $237,300 | $301,600 | +27.1% |
4th “quintile” | $109,500 | $129,300 | +18.1% |
Middle “quintile” | $70,430 | $79,830 | +13.3% |
2nd “quintile” | $42,490 | $45,940 | +8.1% |
Lowest 20% | $16,940 | $16,640 | -1.8% |
Obviously, bare income data blurs some important points and conceals others altogether. Census uses “pre-tax income”; were they to add health insurance subsidies, student aid, nutrition programs, and so on, inequality and income measurements would look somewhat different, and the second and first “quintiles,” in particular, would fare better. Likewise, the quintiles of 2000 aren’t the same as those of 2023: a larger share of lowest-20% families, for example, may be recent immigrants expecting better things soon. But this noted, the patterns do suggest that (a) America’s affluent families gained ground faster in the century’s first two decades than the middle class, and the middle class faster than working families and the poor; and (b) inflation and rising housing prices (and taxation of clothes, spoons, and life necessities) hit lower-quintile families hardest.
Returning now to the most recent BEA and Census income and equality data, the record since the COVID-19 pandemic, and over the Biden/Harris administration’s first three years, looks strikingly better.
Census published its income figures for 2023 last month. They show the national “Gini coefficient” peaking at 0.494 in 2021, then falling to 0.489 in 2022 and 0.485 in 2023 — still high in historic terms, but the lowest figure since 2017. Meanwhile, the bottom three quintiles’ share of national income rose from 24.8% in 2021 to 25.5% in 2023, while the top 5%’s share fell from 52.7% to 51.9%. Taking this from percentages to actual income, in 2023 families earned about $17 trillion (including wages and salaries, plus pension payments, investment earnings, rental properties and farm incomes). Assuming shifting income distribution doesn’t change the totals, moving 1% of this $17 trillion from the wealthiest 5% to the bottom 60% means an additional $170 billion for the 83 million American middle- and low-income households, or an average of $2,000 each.
At home –
Census on incomes, equality and inequality:
BEA tallies U.S. GDP, growth, incomes, and more.
International comparisons –
The International Monetary Fund’s World Economic Outlook database (note updates coming in a couple of weeks) has growth, GDP size, and lots more for the world, regions, and countries.
The World Bank’s table comparing income inequality across countries, with (generalizing a bit) Latin America and southern Africa as the world’s least equal regions, and central and northern Europe most equal:
Background and more comparisons from Our World in Data:
And more on Corrado Gini –
Dr. Gini, though a pioneer of modern statistics, was also a sinister political nitwit. Head of the International Statistical Society in the 1920s, Gini also moonlighted as president of the Italian Eugenics Society, believed the “reproductive instinct” was in long-term decline, and as an enthusiastic Mussolini supporter wrote tracts such as the English-language article The Scientific Basis of Fascism. Later on he changed his mind and adopted a totally different view of the world, proposing in 1944 that the United States annex all the other countries and form a world government. A bio.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.