Increase in Income Inequality Driven by Real Declines in Income at the Bottom

DATA USER NOTE:

On July 17, 2026, the Bureau of Labor Statistics re-released SPM thresholds for 2019-2024 following the discovery of coding errors. The U.S. Census Bureau will publish revised SPM poverty rates using these updated thresholds prior to the release of the annual poverty report in September. Refer to BLS statement and Census statement for more information.

Real median U.S. household income was $70,784 in 2021, statistically unchanged from the previous year, although income inequality increased for the first time since 2011, according to today’s U.S. Census Bureau release of the Income in the United States: 2021 report.

The data are from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC).

Declines in real income at the bottom of the income distribution resulted in increased income inequality as measured by the Gini index — a common measure of income inequality.

Income inequality refers to how evenly income or income growth is distributed across the population. Higher income inequality represents less equal income distribution or growth. The report provides several measures of inequality. In this story, we focus on changes in the Gini index and the ratios of income at different percentiles.

The Gini index measures income inequality ranging from 0 to 1 — reflecting the amount that any two incomes differ, on average, relative to mean income.

It is an indicator of how “spread out” incomes are from one another. A value of 0 represents perfect equality, meaning all households had the same amount of income. A value of 1 indicates total inequality, meaning that one household had all the income.

Using pretax money income, the Gini index increased by 1.2% between 2020 and 2021 (from 0.488 to 0.494). This annual change was the first time the Gini index had increased since 2011.

Declines in real income at the bottom of the income distribution resulted in increased income inequality as measured by the Gini index — a common measure of income inequality.

Prior to 2011, the Gini index had not shown an annual increase since 1993, the earliest year available for comparable measures of income inequality. Since 1993, the Gini index has increased 8.8%.

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