Wealth Gap Is Still Dividing Rich And Poor Americans

Lisa Smith, BA (Hons), CeFA

The United States is a nation of haves and have nots with an ever-widening gulf between them, says a new study.

Although America has seen a booming economy, more jobs and more wages for many, there are neighbourhoods where the bonanza has passed people by.

In fact, they have seen no economic improvement so far this century.

According to the 2017 Distressed Communities Index, more than 52 million Americans live in areas characterised by deep poverty, high unemployment and low levels of schooling.

The think tank Economic Innovation Group (EIG) argues in some zip codes, 40% of adults have never worked and a quarter have no qualifications from high school or above.

What it means to be wealthy

“Economic inequality in America translates into opportunity gaps for too many communities,” said Steve Glickman, cofounder and executive director of the Economic Innovation Group. “Unless policymakers in both parties reframe their priorities, economically distressed communities will continue to experience a downward spiral that results in a loss of faith in the American dream and less healthy and fulfilling lives.”

Meanwhile, America’s more prosperous zip codes are insulated from the challenges facing the rest of the country.

These communities are home to 84 million people who garnered more than half of the recovery’s new jobs and business start-ups.

The poverty rate is more than 20 points lower in the average prosperous community than in the average distressed one, and residents enjoy incomes that approach, on average, 150% of their state average.

Race still determines economic status

“These findings underscore just how badly we are limiting our national potential,” said John Lettieri, cofounder and senior director for policy and strategy of the EIG. “There is a huge social and economic cost to leaving so many people and places behind.”

He also explained that race and ethnicity are still signposts of personal economic well-being in the US.

“Asians and whites are more likely to live in prosperous zip codes than any other type, while blacks and Native Americans are most likely to live in distressed ones. Zip codes in which minority groups constitute a majority of the population are two times more likely to be distressed than the average zip code,” said Lettieri.

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