“High-income people are doing just fine in this economy,” said Mitt Romney in last week’s U.S. presidential debate. They certainly are. Recent data shows income inequality in America is escalating fast. The income gap, according to new Census Bureau estimates, reached a four-decade high in 2011. The Gini coefficient, a widely used index to gauge wealth distribution, hit 0.47 (zero represents equality, and one represents extreme inequality). The census reports that 1.2 million households in the top one per cent saw an increase of 5.5 per cent in earnings last year, while the 96 million households in the bottom 80 per cent saw a decline of 1.7 per cent in earnings.
Income inequality in the U.S. may now be more severe than it is in China, where the Gini coefficient was calculated at 0.438 in 2010. That figure showed only a slight increase from its 2005 level of 0.425. Observers say this finding suggests the country’s income gap may be stabilizing (though the number is controversial, as the wealthy in China are often reticent to disclose household incomes).
Regardless which country is better or worse, Gini coefficient levels in both China and the U.S. have risen past what the UN calls the “danger level” of 0.40.