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The New American Inequality

For American families, income inequality affects nearly everything else, from academic achievement to long-term health. Here’s how the problems work together—and how we can solve them.

By Vanessa Hua


(Photo: iStockPhoto)

Income Inequality

The earnings gap between the rich and poor — has been growing in the United States since the 1970s. As of 2014, the average income of someone in the nation’s top 0.1 percent was over 184 times the average income of someone in the bottom 90 percent.

People care about inequality because individuals tend to evaluate their economic well-being relative to that of others. Today, Americans agree that inequality has grown, but they remain divided on the cause: 20 percent blame Congress and loopholes in the tax system. About 4 percent attribute it to a subpar work ethic among the poor.

Income inequality is not a simple or standalone metric: It plays a role in the health gap, the income achievement gap, and the gender wage gap, among other inequities, all of them related. Here’s what you need to know about each.

Income Achievement Gap

As income inequality in the U.S. skyrocketed, so did the income achievement gap, which measures the discrepancy in test scores between children from high-income families and children from low-income families. For students born between the mid-1970s and 2000, that gap grew by 40 percent.

The association between income and achievement has grown rapidly — income is now almost as strong as parental education in predicting a child’s achievement. And while it’s true that highly educated, higher-income parents spend more time and money on their children to improve the cognitive and academic skills measured by standardized tests, income inequality alone may not be driving the testing gap. During that same period (the 1970s to the present), income inequality grew more pronounced at the bottom of the scale — that is to say, the incomes of poor families stagnated or declined, while the incomes of middle-class and wealthy families grew. Meanwhile, the income achievement gap grew more pronounced mainly at the top — the test scores of children from high-income families pulled away from those in low- and middle-income families, in a period coinciding with a weakening safety net and the growing segregation of neighborhoods and schools by income.

In a comparison of math and reading scores and household income, the U.S. has one of the largest income achievement gaps for both elementary and secondary schools among 20 developed countries, according to a study by sociologists Anna Katyn Chmielewski and Sean F. Reardon.

Studies suggest that countries can focus on policies that improve early childhood experiences for low-income children, such as preschool programs and public spending on families. In research that focuses on kindergarten school readiness, the income achievement gap shrank in recent years (1998–2010), a period that also saw increases in low-income children’s preschool enrollment rate, parental time and money investment, and health insurance coverage. It’s unclear whether these improvements will hold steady as children get older.


(Photo: iStockPhoto)

Gender Wage Gap

With the decades-long stagnation of hourly wages, and especially since Bill Clinton-era welfare reform, more women have entered the labor market to support their families, particularly at the middle- and lower- income levels. Women now hold more than half of the country’s jobs in professional and managerial occupations.

Yet the gender wage gap persists, with women working full-time making only 79 cents for every dollar earned by men. Families in which women are the sole or primary source of income — that’s 40 percent of households with children under the age of 18 — are hit especially hard, with the wage gap contributing to income inequality. If the country’s single mothers — 10 million of them, according to the latest U.S. Census — earned as much as men in comparable circumstances, their annual family incomes would jump by $6,596 on average, or nearly 21 percent. The poverty rate for such families would drop almost by half, to 16 percent.

Half the gender wage gap is due to women working in different kinds of occupations than men, and a new initiative by the Institute for Women’s Policy Research addresses these discrepancies in an effort to lift women out of poverty and reduce income inequality. The initiative encourages women with relevant skills to get training and certification for “middle-skill,” higher-paying jobs in advanced manufacturing, information technology, transportation, and logistics. A library assistant, for example — with her skills in working in a database, coding information, and interacting with others — could become a computer support-staff worker. At present, women hold just 11 percent of these more lucrative, middle-skill jobs.


A version of this story first appeared in the

September/October 2016 issue

of Pacific Standard.

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Pronounced income inequality can increase the risk of mortality, poor health, cardiovascular disease, and other illnesses for everyone, but particularly among lower-income residents. In the U.S., residents of counties with high levels of inequality are more likely to die before they reach 75, according to researchers at the University of Wisconsin Population Health Institute. Men and women are more likely to report poorer health as adults if they experienced income inequality as children.

Inequalities in a community accentuate differences in social class and status and serve as a stressor, begetting a loss of trust and of connection. The Wisconsin researchers urged communities to adopt policies that narrow these gaps, such as supporting educational achievement programs from early childhood to adulthood and investing in workforce development, living wages, and paid sick leave for low-income earners.

Food stamps can be crucial. Economist Hilary Hoynes found that children in counties where food stamps were available from the time they were in utero to age five had significantly decreased risk of metabolic syndrome, as well as improved likelihood of economic self-sufficiency later in life, compared to those living in counties that did not offer this assistance.

Money spent on young food-stamp recipients during the 1960s and ’70s is reaping benefits for taxpayers today, Hoynes contends, because former recipients now rely less heavily on the social safety net, with fewer health problems, less welfare use, and higher incomes.