WV Center on Budget and Policy > Blog > Economy > Growing Income Inequality

Growing Income Inequality

I’ve talked before about how the middle class is falling behind, due to rising income inequality. One way to measure inequality is the Gini Index. The Gini index is used to measure the distribution of income in a region. The higher the score on the Gini index, the greater the income inequality. A score of 1 means that all the income in a region is held by a single person, and a score of zero means that all income is held equally among the population.

In 2008, West Virginia’s Gini Index score was 0.453, below the national score of 0.467. The states overall ranged from .403 in Alaska to .503 in New York. So compared to the rest of the country. West Virginia’s income inequality is about average. 
 
Gini Index by State, 2008
Source: U.S. Census Bureau
 
However, the trend has been growing towards more inequality. The Census Bureau first started measuring the Gini Index in 1967, and the national score was .397. Since then the score as steadily grown to its current level of .467, as inequality has grown. 
 
Most of the income growth over the past generation has been experienced by the those at the top of the income scale. Between 1979 and 2000 the real income of households in the lowest fifth grew 6.1%; the middle fifth by 12.3%; and the top fifth by 70%. Average income for the top 1% grew by 184%. Middle income families have kept their incomes rising in the past few decades in part due to the rising number of women in the workforce.
 
Other factors contributing to growing inequality are the falling value of the minimum wage, the erosion of unionization, the decline of the manufacturing sector, higher educational job requirements, and growth in executive pay. For example, in 1965 CEOs in major companies earned 24 times more than the average worker; by 2000 the ratio had grown to 300.
 
Families in West Virginia and throughout the country continue to work hard to make ends meet and improve their lives. However, they are seeing less and less of the benefits of their work. When we get out of the Great Recession and begin to see real growth again, it will be because of the hard work and productivity of working families, hopefully some more of that growth will reach them.

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