Economic Inequality Ticks Higher as Inflation Takes a Toll on Lower-Income Americans

Updated: April 27, 2022

The Morning Consult / Axios Inequality Index as of April 2022, based on an average of over 260,000 survey interviews per month.

 

Each month, Morning Consult conducts over 260,000 survey interviews on a wide variety of economic and financial topics, allowing us to precisely gauge how economic inequality is shifting in response to policy developments, business conditions and current events. This data is inputted into the Morning Consult / Axios Inequality Index.

Our economic inequality index is based on four indicators: consumer confidence, employment outcomes, employment expectations and financial vulnerability. When there are larger gaps between income groups on these indicators, the level of inequality rises. A full methodology and explanation of the index is available below.

Charts depicting income inequality indicators in the U.S. for April 2022 by income Charts depicting income inequality indicators in the U.S. for April 2022 by income

ANALYSIS OF THIS MONTH'S DATA

  • The Morning Consult/Axios Economic Inequality Index rose from 5.56% in March to 5.88% in April, indicating greater economic inequity across income groups in the United States. The increase follows a sharp decline in March, when more acute concerns about financial volatility and inflation among higher-income households drove a decrease in the index. However, economic inequality started to tick back up in April, driven primarily by relatively higher levels of financial vulnerability and employment income losses among lower-income households this month.
  • Looking forward, we could see continued widening in economic inequality due to rising prices. While sentiment among wealthier Americans initially fell further and faster, over the longer term rising prices and declines in purchasing power will have a bigger impact on those who are least able to cope.
  • Inflation is at a 40-year high in the United States, and despite sizable gains, wages are not keeping pace with price increases. Additionally, pandemic-era support programs have largely expired. Higher prices for staples like food and gasoline will eat away at larger shares of income for lower-earning households, intensifying inflation’s negative impact on America’s most vulnerable. As such, the share of workers from households earning less than $50,000 who said they lacked savings to cover basic expenses for a full month rose to 34.2% in April from 32.3% the month prior, while the share among households earning above $100,000 fell from 11.2% to 8.6%.
  • Disparities in employment outcomes also increased. While the share of Americans experiencing lost employment income has trended lower across income groups in recent months, a higher share of lower-earning Americans reported income losses in April. According to Morning Consult’s Lost Pay/Income Tracker, the share of workers from households earning less than $50,000 who lost income rose from 13.2% in March to 13.7% in April, while the share among households earning above $100,000 fell from 10.2% to 7.3%.
  • Job security metrics continue to improve, including for lower-income workers. The share of employed U.S. adults from households earning less than $50,000 who expected to experience a loss of employment income in the next four weeks fell from 14.6% in March to 12.4% in April. This is the lowest level since the beginning of the series nearly two years ago.

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CONSUMER CONFIDENCE

Consumer confidence is measured using Morning Consult’s Index of Consumer Sentiment, which captures consumers’ views regarding current and future personal financial conditions and business conditions in the country as a whole.

LEVEL OF INEQUALITY

The level of inequality in consumer confidence reflects the standard deviation of consumer confidence across low-, middle- and high-income adults.

 

Employment Outcomes

Employment outcomes reflect the share of adults who experienced a loss of pay or income during the prior month.

LEVEL OF INEQUALITY

The level of inequality in employment outcomes reflects the standard deviation of the share of adults who experienced a loss of pay or income across low-, middle- and high-income adults

 

Employment Expectations

Employment expectations reflects the share of employed workers who expect to experience a loss of pay or income in the next four weeks.

LEVEL OF INEQUALITY

The level of inequality in employment expectations reflects the standard deviation of the share of employed adults who expect to experience a loss of pay or income in the next four week across low-, middle- and high-income adults

Financial Vulnerability

Financial vulnerability reflects the share of adults who say they have only enough savings to cover less than a month’s worth of basic expenses, were they to lose their income.

LEVEL OF INEQUALITY

The level of inequality in financial vulnerability reflects the standard deviation of the share of adults unable to pay their basic expenses for a full month using just their savings across low-, middle- and high-income adults

METHODOLOGY

Data Collection:

The Morning Consult / Axios Inequality Index relies on Morning Consult’s proprietary survey research capabilities to collect the four data series that feed into the index.

Monthly Sample Size (May 2020 – April 2022)

Index of Consumer Sentiment – 177,475

Lost pay / income tracker – 105,205

Employment expectations – 1,161

Financial vulnerability – 2,200

Index Calculation:

1. Convert daily and weekly values to monthly values. The index averages weekly values for the lost pay/income tracker and daily values for the Index of Consumer Sentiment to produce monthly values.

2. Convert Index of Consumer Sentiment values to net percentages. The Index of Consumer Sentiment is on a scale from 0 to 200 while the other three series are percentages that run from 0 to 100 percent. This difference in units prevents direct comparison of the four components and limits the ability to combine them into a single inequality index. In order to address this issue, the ICS values have to be reduced by 100 and divided by 100 so that they reflect net percentages.

3. Calculate each of the four components. Each of the component series is calculated by taking the standard deviation of the three values across the income spectrum. The resulting values represent the degree of variation or dispersion from the mean among low-, middle- and high-income adults. The higher the component value, the greater the inequality across income groups.

4. Calculate the overall index. The Morning Consult / Axios Inequality Index is an average of the four component values. The higher the index value, the greater the inequality across income groups.

FAQs

1. What is the Morning Consult / Axios Inequality Index?

The Morning Consult / Axios Inequality Index measures economic inequality across income groups on a monthly basis.

2.How does the Morning Consult / Axios Inequality Index define economic inequality?

The Morning Consult / Axios Inequality Index defines economic inequality in terms of consumer confidence, employment outcomes, employment expectations and financial vulnerability, each of which plays an equally important role in capturing the economic experiences of adults across the income spectrum.

3. Why is it important to measure economic inequality?

Traditional economic indicators provide limited insight into the ways in which different groups of adults are experiencing the economy, thereby increasing the risk of economic policies leaving behind certain groups of individuals.

Persistent or increasing economic inequality casts doubt on the fairness of America’s economic system and undermines the sustainability of economic growth.

4. How does the index compare to the Gini coefficient?

Unlike the Gini coefficient, the Morning Consult / Axios Inequality Index does not measure the distribution of income or wealth in the country. Rather, it measures the impact of income differences on driving differences in economic experiences.

5. How are Morning Consult and Axios planning on measuring and analyzing other forms of economic inequality not included in the index?

Morning Consult and Axios are both committed to measuring and analyzing additional forms of economic inequality not explicitly included in the index, including issues related to wealth disparities and intergenerational economic mobility. These additional forms of economic inequality exist not only across income groups, but also by race, ethnicity, gender, educational attainment and parental status, to name a few. Future monthly releases will highlight some of these additional disparities in economic experiences via special reports and analysis.

6. How is the data for the Morning Consult / Axios Inequality Index collected?

The Morning Consult / Axios Inequality Index relies on Morning Consult’s proprietary survey research capabilities to collect the four data series that feed into the index.

7. How should the index values be interpreted?

The values of the Morning Consult / Axios Inequality Index answer the question “how differently are U.S. adults with annual incomes below $50,000, between $50,000 and $100,000 and over $100,000 experiencing the economy?” The higher the index value, the more differently adults across the income spectrum are experiencing the economy.

8. How often will the index be published?

The Morning Consult / Axios Inequality Index will be published on a monthly basis during the last two weeks of the month.

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