US States By Gini Coefficient

US States By Gini Coefficient

Gini Coefficient measures the inequality of wealth distribution or income inequality in a particular area. While a perfect scenario would be that of equality in income distribution, this is not normally the case in most of the areas around the world. There is always a disparity in income between different households and between cities, countries, and regions. In America, about 25% of the workers earn below the poverty line. The top 10% earners in the country take home 50% of all income while the top 1% earners take home 20% of all income. The rich continue to get richer with the poor continue to stagnate or make little progress economically.

Interpretation of Gini Coefficient Values

The Gini coefficient values range from zero to one. A figure of zero on the Gini coefficient represents equality in the income earnings within society, where every person in the society has the same income. A Gini coefficient of 1 represents maximal inequality among the income earners. Among a large group of people, only a single person has all the income while the rest have none. A Gini coefficient value of more than one may also occur in some cases where someone contributes negatively or has negative income. A low Gini coefficient score is associated with a fairly distributed income while the higher score represents skew and disparity of revenue. The Gini coefficient on disposable income measures inequality in income after the effects of taxes and social spending have been considered.

Income Inequalities in the US

Income disparity and inequalities are common in the US just like in other countries around the world. A report highlighting the income inequality across the 50 states of the US was compiled with the data generated by the American Community Survey which was carried out by the US Census Bureau. The US Census Bureau started compiling the income for households in 1967. The US has the highest income disparity among the Western industrialized nations. Every state in the country is experiencing an impact of income inequality which is lifting the fortune of the rich and leaving the rest of the workers behind. According to the report, Utah has the flattest income distribution with a Gini coefficient score of 0.419. It is closely followed by Alaska, Wyoming, and New Hampshire with scores of 0.422, 0.423 and 0.425 respectively. The District of Columbia and New York have the highest income disparities between wage earners in all the income categories with a Gini coefficient of 0.532 and 0.499 respectively. Other states which have also shown large disparities include Connecticut, Massachusetts, and Louisiana. Income inequality has grown significantly over the last four decades across all the states of the US. The free market and capitalism and less progressive spending on the social services are some of the contributing factors to the disparity in income

Causes of Income Inequality in the US

Unionization and collective bargaining are very low in almost all the state in the US. Cheap labor in China and unfair exchange rates are also a contributing factor to high-income disparity in most of the states. The government tax policies have benefited the investors more than the low income earners. Technology has also brought about inequality and at the same time replaced many workers. Policy choices and cultural forces have put downward pressure on wages and income.