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Income inequality across racial groups and the Gini ratio

Income among Black households and families is the least equal

The FRED Blog has used the yearly Current Population Survey conducted by the U.S. Census Bureau to illustrate measures of inequality and highlight the difference between households and families. (A household includes all people living in a housing unit; a family includes only those related by marriage, blood, or adoption.) This post compares inequality for both household and family incomes across racial and ethnic groups.

The FRED graph above describes household inequality with something called the Gini ratio. This Gini ratio is a statistical measure of how unequal incomes are within a group. A value of 1 indicates absolute inequality, where one household earns all the income and the rest of them earn nothing. A value of 0 indicates absolute equality, where all households earn the same income.

The data show very similar degrees of income inequality for Asian, White, and Hispanic households. Black households consistently record higher income inequality than all other racial and ethnic groups. That means that the inequality between the high-earning Black households and the low-earning Black households is more pronounced than between the high-earning and low-earning households in the other population groups.

For comparison, the second FRED graph shows the income Gini ratio for families. It tells the same story about income inequality across racial and ethnic groups as the first graph does. Overall, household income inequality is higher than family income inequality across all racial and ethnic groups, although the relative difference between households and families is smallest among Hispanics and largest among Whites.

How these graphs were created: First graph: From FRED’s main page, browse data by “Release,” search for “Income and Poverty in the United States.” Select the “Income Gini Ratio for Households by Race, Annual” table. Next, check the box to the left of each of the four series shown in the graph. Last, click on “Add to Graph.” Second graph: Select the “Income Gini Ratio of Families by Race of Householder, Annual” table and repeat the last two steps described above.

Suggested by Diego Mendez-Carbajo.

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