Click to see the beacon journal online
Homes   Jobs   Cars   Shopping
Akron Law Café -- Community Blog

Previous post:

Next post:

Income gap between the rich and the poor

by Lynn Lenart, Law Librarian on February 5, 2011

in Banking & Finance Law,Government,Legal Resources

Is there an increasing gap between the rich and poor? 

This isnât news but based on some of the comments to Thursdayâs blog post I decided to point readers to government information on this topic.

First… data on poverty:

  • The nation's official poverty rate in 2009 was 14.3 percent, up from 13.2 percent in 2008 â the second statistically significant annual increase in the poverty rate since 2004.
  • This was the highest poverty rate since 1994.
  • There were 43.6 million people in poverty in 2009, up from 39.8 million in 2008 â the third consecutive annual increase.
  • This is the largest number of people in poverty in the 51 years for which poverty estimates have been published.

The current poverty thresholds for 2010 (released in Jan. 2011) are:

  • $22,162 for a family of 4
  • $11,369 for one person (under the age of 65)

Source:  Income, Poverty and Health Insurance in the United States, 2009.  Statistics were released by the Census Bureau in Sept. 2010. 

More information:

Census Bureau web page on poverty

Updated 2011 data

Census Bureau alternative poverty estimates that factor in a range of poverty thresholds and different assumptions.  

How poverty is measured

Let us not forget those that work but are still below the poverty level.  A Profile of the Working Poor, 2008 data released March 2010.  The working poor are those who spent 27 weeks or more in the labor force but whose income still fell below the official poverty level.  Update statistics will be released in March 2011.

The U.S. Dept. of Health and Human Services version of the U.S. Federal Poverty Measure.  There are other factors to look at such as housing vacancy rates, homeownership, food stamp recipients, etc.


Data on wealth:

Income inequality is increasing, according to the Census Bureau.  ââ¦comparing the change in household income between 1999, the year that household income peaked before the 2001 recession, and 2009 suggests income inequality is increasing.â

âIn 2009, the share of aggregate income received by the highest quintile (those making $100,000 or more), was 50.3%.â   In fact, the Census Bureau calculates the income inequality at least 3 different ways (Gini, Theil, Atkinson), and each way shows that about 50% of the wealth is made by those in the highest quintile.

The problem is not the fact that the rich are getting richer.  The problem is – those that make $100,000 or more are getting a larger and larger percentage of all income generated in the United States.    The changes from year to year are not much, but this percentage has doubled over the last thirty years, widening the inequality gap.   Source: Income Inequality section of this report (see page 9, PDF page 17)

Additional, this income gap is the largest among the Western industrialized nations.  See here and here, more here and here. 

More data on the wealthy:

Income distribution by household (see Table A1, page 33, PDF page 41, Table A2, page 40, PDF page 48).

2009 Income statistics reported by the Census Bureau

Income Inequality (historical data)  

Bureau of Labor Statistics, Earnings


What about the Middle Class?

So more and more people are below the poverty level, and less and less people control a larger and larger share of the annual income.   America used to have a strong middle class.  Some could say one of the strengths of our country was having a large middle class.  What has happened to the middle class? 

They are losing too. Loss of jobs, furloughs or other economic hardships caused some to slip down into the poverty ranks, or households saw their incomes drop.    Median household income for 2009 was $49,777, a drop of 1.8% from 2008. 

More information:

Defining the Middle Class

Middle Class Task Force (Office of the Vice President)