Census: Income Inequality Unchanged Since 2000
According to a key Census Bureau measure, income inequality has been unchanged since 2000. The Census Bureau recently confirmed that no statistically significant change in the inequality measure occurred between 2000 and 2007 (see chart above), the last year for which data are available. The measure referred to here is known as the Gini coefficient, a standard gauge of income inequality published by the Census Bureau and widely used by economists and other researchers (Gini coeffients data here for households and families).
When examining income data for different groups over time it should be recalled that there is a good deal of income mobility between income groups, and membership of various income groups changes significantly over extended periods of time. For example, a household that was in the middle fifth in 1985 is probably no longer in that group now. As a result, changes in the middle fifth’s average income between 1985 and 2005 aren’t a good reflection of the changes in the economic well-being of a household that left that income group years ago. Nearly half of all households move to a different fifth in as little as three years.
Also, inequality in consumption is much less than inequality in income. For example, the level of consumption in the bottom fifth is nearly twice that of income, indicating that income is not necessarily the best measure of economic well-being. Congress will have to carefully consider these data and other relevant statistics in order to make informed policy decisions.