K-12 Tax & SPENDING Climate: US income DatA

Aaron Brown:

Income in the bottom 80% of households was up significantly, only the top 20% of households saw an income decline, as a result, the Gini coefficient (a measure of income inequality, higher numbers mean more inequality) fell from 0.489 to 0.486

· Usually when the Gini index falls, incomes go down for everyone; it’s been 20 years since we’ve seen this big a decline in the Gini index when incomes went up

The news coverage didn’t seem to jibe with the numbers. The real good news about income, earnings, employment and poverty was overlooked entirely to focus on the more abstract Gini coefficient. When income and employment go up, and poverty goes down, that’s unalloyed good. The Gini coefficient is more complicated. It mainly fluctuates based on how financial markets are doing, because top earners depend largely on investments, and those are more volatile than the salaries that underpin middle-class incomes. Moreover many top earners compensation is dependent on financial markets—executives with stock options and profit shares, Wall Street professionals with market-dependent bonuses, business owners paid out of profits.