Inequality

Why did we include this measure?

The Gini coefficient is a common measure of inequality and describes the extent to which a measure like income is concentrated within certain groups. When the income Gini coefficient is zero, it means everyone has exactly the same income. When it is 100, it means that a single person has all the income. (Of course, these extremes almost never occur in practice, but the extremes are useful for understanding the scale.) The specific income Gini coefficient we use captures only wage earnings, excluding pensions, government taxes and transfers.

How does Oregon compare to the rest of the country?

Although Oregon's trend in income inequality has been worsening more than the US, it did not change in state ranking by two or more places. Therefore, we categorize Oregon's comparison to the US as neutral or stable. In the most recent year, Oregon ranked 21 (out of 51). In the same year, Utah ranked first, and New York ranked last.

Additional Information.

Income inequality is driven by a complex set of forces, including the variation in education and human capital, decisions made by individuals regarding their careers and work hours, segregation and isolation of opportunity, the strength of labor unions and minimum wage laws, free trade policies that place US workers in competition with those in low-wage countries, technological change favoring high-skill workers, and government taxation and spending. While we do not argue that any factor is more important than the others, we can say that the national rise in income inequality is driven mainly by people with very high incomes. As we show below, poverty is actually declining nationally, which reduces income inequality. So, the "rich are getting richer" faster than the poor. Also, income inequality is intertwined with wealth inequality. Wealth comes mostly from inheritance and other financial support across generations, which also produces income. The high and growing level of US wealth inequality therefore partially explains rising income inequality.

Why did we include this measure?

There is general agreement that people should be able to provide the most basic material needs for themselves and their families. Poverty measures capture this by identifying households where these needs are not being met. An advantage of the Supplemental Poverty Measure we use is that it accounts for a wide variety of factors affecting the economic resources people have available. First, it counts more than just wage income and includes cash benefits and some in-kind government supports that are intended to prevent poverty. Income from Social Security, Supplemental Nutrition (SNAP), Earned Income Tax Credit (EITC), Child Tax Credit, and housing subsidies are all included, for example. Second, this supplemental poverty measure subtracts necessary expenses, such as taxes and out-of-pocket health expenses, from that income when deciding whether someone is living in poverty. (Medicare and Medicaid benefits are not directly counted as income, but these programs affect out-of-pocket health expenses, which are accounted for as necessary expenses.)

How does Oregon compare to the rest of the country?

Oregon's trend in poverty has been worsening while the US has returned to the same level as the first year of data. Compared to other states, Oregon has also decreased in state ranking by two or more places. Therefore, we

Additional Information.

In the discussion above, we noted some of the factors affecting income inequality generally, and most of these also affect poverty. The US has government programs intended to reduce poverty, but there is debate about the degree to which the government should address poverty directly, given the costs to taxpayers. Also, government programs may reduce employment, which could increase poverty over the longer term.