Income inequality has been rising more slowly in Wisconsin than at the national level over the past three decades, though it remains on an upward trajectory.
In a recent UW-Madison Division of Extension report, Prof. Steven Deller examined trends in state and national income inequality. Concerns about how economic growth benefits the general populace “have been discussed for decades, if not centuries,” he noted.
“The most common concern is that higher-income individuals benefit disproportionately from economic growth, with the benefits trickling down slowly to lower-income individuals,” Deller wrote. “In other words, as the economy grows, the distribution of income tends to skew towards higher-income individuals.”
He used a metric created by Italian statistician Corrado Gini in 1909 in his analysis, drawing on data from 1917 to 2020. The “Gini Coefficient” ranges from zero to 1, with lower values representing a more even distribution and values closer to one showing greater inequality.
He found the state’s income inequality has historically remained below that of the country overall, suggesting that income distribution in Wisconsin is “generally more even.” The state’s inequality measure has largely followed the ups and downs of the national measure, while almost always remaining below it.
Deller notes the national Gini Coefficient has been on an upward trend since World War II, “highlighting concerns about rising income inequality” across the country.
After hitting its low point of around 0.36 in 1941, Wisconsin’s income inequality measure rose to just under 0.55 in 1989. From there, it had increased to around 0.60 by 2019.
In Wisconsin, the inequality metric has risen “slightly slower” than the U.S. average since about 1990, the report shows. Between 1989 and 2019, the national figure has increased from about 0.58 to around 0.66, Deller found.
“While the data for Wisconsin points to rising income inequality, the Gini Coefficient does not provide insights into the economic well-being of lower-income individuals, such as patterns in poverty rates,” Deller wrote. “It could be that the economic well-being of all individuals has been rising over time, but the distribution of that increase is uneven.”
See the report.
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