Study Ranks U.S. Last Among Wealthy Countries on Poverty, Inequality

The United States ranks dead last on many measures of poverty and inequality when compared to other wealthy countries, a report from the Stanford Center on Poverty and Inequality finds.

The report, State of the Union: The Poverty and Inequality Report 2016 (80 pages, PDF), analyzed data on poverty, employment, income and wealth inequality, economic mobility, educational outcomes, health inequities, and residential segregation and found that among ten developed Western countries, the U.S. ranked lowest overall. In the six major categories, the U.S. ranked fifth in terms of poverty, eighth for health of labor markets and economic mobility, and tenth for safety net performance, income inequality, and wealth inequality. When the sample is expanded across four categories to twenty-one countries, including less developed European nations, the U.S. ranked eighteenth overall, with only Spain, Estonia, and Greece ranking lower. The report also found that in some states, including Alabama and Kentucky, levels of average health and health inequality are comparable to those in post-Soviet-bloc countries such as Bulgaria, Estonia, and Latvia.

"We've long known that the U.S. is exceptional, but it hasn't been fully appreciated that it's such a standout in so many types of inequality," said David Grusky, Barbara Kimball Browning Professor in the Stanford School of Humanities and Sciences and director of the federally funded center. One factor that contributes to widespread inequality in the U.S., Grusky suggested, is a "feedback loop" that reinforces barriers to economic mobility, such as when de facto housing segregation limits high-quality education to the children of more affluent families, who then go on to careers with higher earnings, leading to a further increase in income inequality and housing segregation.

At the same time, the study found that a moderate increase in U.S. safety-net spending would push down the rate of disposable-income poverty, which is high primarily because total spending on welfare and unemployment benefits, health care, homeless shelters, and subsidized services is modest, relatively speaking. "This is good news," said Grusky, "because in principle it is easier to reform the safety net than to attempt to retool the economy in ways that would deliver higher market incomes."

"Stanford Report Shows That U.S. Performs Poorly on Poverty and Inequality Measures." Stanford University Press Release 02/02/2015. "State of the Union: The Poverty and Inequality Report 2016." Stanford Center on Poverty and Inequality Report 02/02/2016.