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Income inequality grows even as poverty rates fall: Census

by Reid Wilson - 09/27/19 1:12 PM ET

The wealthiest earners in America are capturing an ever-larger share of income, new data from the Census Bureau shows, exacerbating income inequality even as poverty rates continue to fall across the country.

The median U.S. household earned a record $61,937 between 2017 and 2018. The number of households living in poverty decreased during that period, and poverty rates fell in more than two-thirds of states across the country.

{mosads}But at the same time, the progress built by a decadelong economic recovery appears to be slowing. The median household’s inflation-adjusted income grew by just 0.2 percent, well short of the annual gains made from 2015-2017, and the poverty rate fell by a smaller amount than it has in previous years.

“Things are generally getting better because the economy is still growing, but it seems like what improvements we’re making are slowing down,” said David Cooper, a senior economic analyst at the Economic Policy Institute, a progressive think tank.

The nation’s Gini index, a standard measure of income inequality, rose by a statistically significant margin between 2017 and 2018, the Census Bureau reported. That increase shows a widening divide between the rich and the poor, especially in states like California, Connecticut, Florida, Louisiana and New York, where disproportionate numbers of very high earners live alongside those struggling to get by.

The economic recovery has been most beneficial for states in the so-called Acela Corridor and those that border the Pacific Ocean. Households in Maryland have the highest median income in the country, at $83,242 a year, followed by New Jersey, Hawaii, Massachusetts and Connecticut. Washington, California and Alaska residents also make more on average than the rest of the nation.

But states in the Sun Belt — especially those in the Deep South — continue to struggle. Households in Alabama, Mississippi, Louisiana, Arkansas and New Mexico all have median incomes of less than $50,000 a year. At the same time those states — along with Kentucky and West Virginia — have the nation’s highest poverty rates.

Nearly 1-in-5 residents of Mississippi and New Mexico fall below the federal poverty line, the Census figures show. More than 1-in-6 residents of Louisiana, West Virginia, Arkansas, Kentucky and Alabama are below the poverty line.

By contrast, poverty rates in New Hampshire, Hawaii, Utah, Maryland, New Jersey, Colorado and Minnesota are all below 10 percent of the population.

“Where poverty was high coming out of the recession, particularly in the South, it has remained high,” Cooper said. “The places where we’re seeing improvements happen tend to be in the West. The Pacific region is doing better than everybody else in the past few years.”

The starkest gap between the rich and poor is in Washington, D.C. More than 16 percent of the residents in the nation’s capital live in households that fall below the poverty line, including 23 percent of children under the age of 18. At the same time, the District of Columbia’s median income of $85,203 is higher than Maryland’s, and 18 percent of D.C. residents live in households that have incomes over $200,000 a year.

The new Census figures also show a massive disparity in health care coverage in states across the country. In six states, all of which embraced Medicaid expansion under the 2010 Affordable Care Act, fewer than 5 percent of residents lack health care coverage. In six states that have not embraced expansion, the uninsured rate exceeds 12 percent.

Just 2.6 percent of residents in Massachusetts lack health care, the Census Bureau found. In Texas, the state with the highest level of uninsured residents, 17.7 percent are without coverage. In Houston, the rate of uninsured residents stands at 18.6 percent, the highest level among the nation’s largest metropolitan areas.

Tags Census Bureau Health insurance Inequality median household income Poverty