Has US economic inequality risen less than commonly perceived?
Core argument: The Gini coefficient for household income rose from 0.43 in 1990 to 0.48 in 2020, an increase of 0.05 points, and the rise is smaller after accounting for taxes and transfers.
Recent analyses suggest that the rise in economic inequality is not as dramatic as often perceived. Data indicates that income inequality, as measured by the Gini coefficient, has seen only modest increases over the past few decades. From 1990 to 2020, the Gini coefficient for household income rose from 0.43 to 0.48, a change of just 0.05 points. Furthermore, when accounting for taxes and transfers, the increase is even less pronounced. The top 1%'s share of pre-tax national income grew from 10% in 1980 to 15% in 2020, but this growth has plateaued since the early 2000s. Additionally, consumption inequality has remained relatively stable, suggesting that living standards have not diverged as significantly as income measures alone might imply. These findings challenge the narrative of a severe inequality crisis and highlight the importance of considering comprehensive economic indicators when assessing inequality trends.
Ed Comment:We know much of this but I read it since Scott is a friend so we should add it to the DB. Note my highlighted copy attached. He debunks a lot of the BS. And the paper contains many of the most relevant links (for future reference). I thought the 4 best facts were 1)PIcketty and Saez’s original inequality estimates assumed the bottom 90% were poorer in 2018 than 1979. They now agree they are 40% better off.CBO finds the median HH income has risen 55 to 60% after taxes and transfers. 2)PIcketty and Saez’s show a rise in wealth of the top 1% from 23% in ‘79 to 35% in 2019. Smith, Zidar, and Zwick cut it from 22 to 30 without social security or Medicare. And find including social security but not Medicare cuts the rise of the 0.1% between ’89 to ’16 2 percentage points /4.5 percentage points or by more than half. 3)Had single parenthood not risen, median household income growth from ’69 to 2016 would have risen 61% vs 37% 4) Confirmation that official statistics ignore “income from non-cash government benefits and employer-provided health insurance, does not account for falling taxes and the increasing generosity of refundable tax credits, fails to count couples as pooling their income if they are not married, and overstates the increase in the cost of living each year.”