Economic inequalities in the USA
The United States is a capitalist country. The richest people in the USA have, on average, a far greater share of the total income or wealth than the poorest people. Compared to other developed countries, the USA is very unequal.
The Gini coefficient is a measure of wealth or income inequality within a country, where 0 represents complete equality and 1 complete inequality. According to Statista, the USA is 0.42 (2024) and is forecast to rise further. The UK is at 0.35 (2024).
Economic inequality can be measured in terms of:
- income
- poverty levels
- unemployment levels
Evidence of inequality between different racial groups
Unemployment affects some racial groups in the US more than others.
Economic Issue 1 鈥 Unemployment
In December 2023, the national unemployment rate in the USA was 3.7%. This is close to a historic low and considerably lower than when the US economy and jobs were badly affected by the Covid pandemic.
There is a wide difference in unemployment rates between different ethnic groups. On average, white and Asian Americans are less likely to be unemployed than black and Hispanic Americans.
Unemployment rates (%) by racial group, Dec. 2023 (seasonally adjusted)
(statistics U.S Bureau of Labor Statistics)
| Racial group | white | Hispanic or Latino | black | Asian |
| Unemployment rate (%) | 3.5 | 5.0 | 5.2 | 3.1 |
| Racial group | Unemployment rate (%) |
|---|---|
| white | 3.5 |
| Hispanic or Latino | 5.0 |
| black | 5.2 |
| Asian | 3.1 |
Median household income ($) levels by racial group, 2022
There are also clear inequalities between racial groups in respect of average household income. Median household white Americans income was around $81,060 in 2022, compared to $62,800 for Hispanic Americans and $52,860 for black Americans. Asian American median household income was the highest in 2022 at $108,700.
Median household income ($) by racial group, 2022
| Racial group | white | Hispanic or Latino | black | Asian |
| Average annual household income ($) | 81,060 | 62,800 | 52,860 | 108,700 |
| Racial group | Average annual household income ($) |
|---|---|
| white | 81,060 |
| Hispanic or Latino | 62,800 |
| black | 52,860 |
| Asian | 108,700 |
Poverty rates (%) by racial group, 2022
Poverty rates or the levels of poverty between different racial groups are also not equal. On average, black and Hispanic Americans are more likely to be in poverty than white or Asian Americans. The evidence would show that black and Hispanic Americans are twice as likely to be in poverty when compared to white and Asian Americans.
| Racial group | white | Hispanic or Latino | black | Asian |
| Poverty rate (%) | 8.6 | 16.9 | 17.1 | 8.6 |
| Racial group | Poverty rate (%) |
|---|---|
| white | 8.6 |
| Hispanic or Latino | 16.9 |
| black | 17.1 |
| Asian | 8.6 |
There is debate in the USA as to where the poverty line should be drawn. Many social commentators would set the poverty line higher than where the US government sets the poverty line. Wherever the poverty line is drawn what is generally accepted is that poverty rates in the US are higher than elsewhere in the developed world.
It is important to stress the differences in unemployment rates, average household income levels and poverty rates are averages. Within the US, all racial groups have people who are unemployed, have high/low household incomes and who live in poverty.
Note: The Census states that Hispanic and Latino 鈥榬efers to a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin regardless of race鈥. This means that those who identify as Hispanic, or Latino will be found in the groups above.
Explaining income and poverty inequalities between different racial groups
There are different and complex reasons which explain why black and Hispanic Americans are more likely to be unemployed, have lower household incomes or live in poverty. These include:
- People from poorer areas tend to have lower education levels and there is a link between low levels of educational attainment and unemployment/poverty. This is more likely to affect people from black or Hispanic backgrounds who are statistically more likely to live in poorer areas and therefore have fewer educational qualifications.
- Discrimination 鈥 Studies show that job applicants with identical job applications with names which sound white are more likely to receive a callback than those which sound black or Hispanic.
- A greater percentage of people from minority groups have less access to transport and affordable childcare allowing them to take the jobs which do become available.
President Biden鈥檚 attempts to tackle unemployment, low income and poverty
When the Covid pandemic hit the USA in 2020, millions of Americans lost their jobs and unemployment rose sharply reaching just over 14%.
On taking office in Jan 2021, one of President Biden鈥檚 highest priorities was to get those Americans who had lost their jobs back into work.
His administration鈥檚 plan, the American Jobs Plan (AJP), looked to create more jobs through a 10-year, $2 trillion investment programme of building roads, railways and bridges, extending airports and ports, and extending high-speed internet capacity. By March 2022, thanks in part to the AJP, the US unemployment rate had more than halved to 6%.
Biden 2024
In his three years as president to December 2023, under Biden:
- the US economy had added more than 14 million jobs with the employment rate rising from 61.3% to 62.5%
- the national unemployment rate was 3.7%
- the economy grew by a credible 2.5% in 2023
- the number of people receiving federal food assistance had declined by 700,000