Measuring the wealth and income gap, step by step

Measuring the gap between the richest and poorest in your community is surprisingly easy, thanks to the Census Bureau’s American FactFinder.

Find the answers to these questions to see how this issue looks in your community:

+How does your community compare to the state and nation in its overall inequality of income?

+What percentage of the total income was earned by the top 20 percent? The top 5 percent?

+What percentage of your community is under the official poverty line? What percentage have incomes of more than $100,000?

For all three of the statistical measures described here, start from the American Fact Finder section of the US Census Bureau website: http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml

From the home page, click on Advanced Search and then “Show Me All.”

In Advanced Search, you can search by a topic, and then narrow down the results by using the choices within the options listed under menus in the upper left corner of the page.

You’ll want to select the Topic before the Geographies.

About the years

It’s important to understand the years used in this data.

You don’t need to wait for a census once in a decade to get good, local data. All of the measures are based on the American Community Survey, or ACS. This is detailed information collected from a national survey every year, since 2006.

There are ACS datasets for 1-, 3- and 5-year periods. Each year, the survey is conducted with a sample of people from every county, about 1 percent of the population.

The one-year sets only include larger areas, because the annual sample is not big enough to be accurate for areas with populations of less than 65,000. The 3-year sets can be used for populations as small as 20,000, which covers most counties in Georgia. The 5-year sets can drill down to the smallest geographic units – cities, towns, zip codes, or census tracts – because it combines samples from each of the five years.

One-year sets may give a clearer picture because they include only the data for that year. The multi-year sets combine data from 3 or 5 years of surveys. The 5-year set for 2014, for example, uses data from the surveys of 2010-2014.

In order to see the data for county subdivisions or census tracts, you’ll need to look at the 5-year data set. Since these can be very small population numbers, be sure to check the margin of error.

You can see a map of the census tracts for your county by looking here: http://www.census.gov/geo/maps-data/maps/reference.html

For Georgia, http://www.census.gov/geo/maps-data/maps/2010ref/st13_tract.html.

Gini index

The first way to measure the income gap in your area and easily compare it to other areas is to use a standard ratio, the Gini index. The Gini summarizes income distribution with a measure applied by the Census Bureau to its annual American Community Survey statistics.

The range of the Gini index is zero to 1, and a lower number indicates a more even distribution. So, a Gini of zero for income distribution would mean everyone has exactly the same income, and Gini of 1 would mean one person has all the wealth.

In the U.S., the overall Gini for 2010-2014 was .476. This increased from .467 in 2006-2010. At the county level, the range across the U.S. was .207 to .645.

These figures give you a baseline to compare inequality in your area to others.

Start from the Factfinder Advanced Search page, and use “Gini” as the search term. Click “Go” and you’ll be taken to a page with more details.

Gini 1

From this page, click the box next to the most recent 5-year dataset (usually the one at the top). As of this writing, that’s 2014, which was released in September 2015. Then if you want to compare the most recent year to other years, you can also select that year.

You can go to “Show Results From” drop-down menu on the middle right and choose any year that has greater than zero. The refined list will still be for your specified geographic area.

Go to Geographies, on the left-hand sidebar, and you can select by county, city, Zip code and other localities.

Geographies

To compare counties within your state: Click “County – 050” under Geographic Type. Select your state. Under Geography Name, select the checkbox for “All counties within Georgia” or just your county.

Click “Add to your selections” and then click “Close” in the top right of the popup window.

Select the checkboxes of the table or tables you want, and click the “View” icon at the top of the list if you just want to review the data. From here you can choose to “Print” the table as a pdf.

If you’d like to review and work with the data in Excel, click the “Download” icon at the top of the list; then click “OK”. It will take a moment for the files to be built and zipped up; then you’ll need to click “Download” again.

In Excel or other spreadsheet program, sort the data rows by the “Estimate” column, and you can see how counties in your state rank in terms of income inequality. You can also compare this to the national average mentioned above, and your state’s average.

Income Shares

Probably the most commonly understood and widely quoted measure is the “shares” or how income is distributed. We use quintiles to look at this distribution.

Quintiles divide the population into five equal-sized groups in order to compare them. Each quintile is one-fifth of the population.

In the case of income, the lowest quintile contains the 20 percent of households that have the lowest income. The highest quintile is the 20 percent of households with the highest income.

The data for income shares that we’ll work with also includes the top 5 percent as a separate field.

For this FactFinder search, use “quintile” (without an ‘s’) as your Topic search term.

The search box will offer several suggestions as you type. Be sure to choose B19082, Shares of Aggregate Household Income by Quintile. (You will not get the “shares” tables if you use “quintiles” as a search term.) Click “Go.”

Shares 1

 

 

Click “Geographies” and in this section follow the same steps as above for Gini. For example: To look at the county level for Georgia, under Geographies, choose County, and check the box for “All Counties within Georgia”.

You will see a long list of tables. Choose the most recent, as above, or years that you want to compare.

Once you have downloaded the data, find your county. Looking at a single row, you can say, for example, that “In Greene County, Georgia, 60 percent of the income went to 20 percent of the households” or “One-third of the income in Greene County went to the top 5 percent.”

Then you can sort the spreadsheet by “Highest Quintile” and / or by “Top 5 percent.” Doing the sort allows you to see the rank of your county in the state (Greene is the highest in terms of percentage of income that went to the top quintile).

Measuring change over time is more complex.

A definitive recent study, released by the nonpartisan Congressional Budget Office in October 2011, reviewed the numbers over three decades and concluded that the distribution of after-tax income in the U.S. “was substantially more unequal in 2007 than in 1979.” You can read it here: http://cbo.gov/publication/42729

The distribution for the years through 2011 is here: 2014 report on 2011 data

The Census Bureau published an annual report on income, poverty, and health insurance from 2003 through 2012 – https://www.census.gov/hhes/www/hlthins/data/incpovhlth/2012/index.html

After that it was only about health insurance –

https://www.census.gov/hhes/www/hlthins/data/incpovhlth/2014/index.html

Community details

If you want more detailed statistics about poverty and income for your area, you can get it from the Data Profile.

In FactFinder, use “data” as the search term and choose “Data Profile.”

profile 1

We’re going to look at just one county for now. Under “Geographies” select “County,” then select your state. Then search or click through the resulting pages to find the county you want. Check its box, and click “Add to Selection” to include this as a filter, then Close.

There are four kinds of data profiles:

  • Social (D02): includes household relationships, education, place of birth, language
  • Economic (D03): employment status, occupation, income, health insurance, commute, and poverty level income
  • Housing (D04): details about the type and cost of housing such as year built, number of rooms, and value
  • Demographics (D05): population numbers by gender, age and race

For stories about income inequality, you will mostly be interested in D03, Economic Characteristics. But other factors such as housing costs and education can also affect income inequality, so it’s worthwhile to look at the other three as well.

If your county is 65,000 or more population, it should have 1-year ACS data. Some counties are too small to have 1-year ACS data, so you may only see 3-year and 5-year.

Because each of these four profiles has so many fields, you will find it easier in this case to use “View” and then “Print” to get a pdf. Using “Download” on the Data Profile will give you a very wide spreadsheet with columns that are hard to decipher. The View format is easy to read and turn into graphics.

Once this version is downloaded, we can look at many different measures – including employment, occupation, income, health insurance, education, and other factors that can affect a person’s ability to stay afloat in hard times. These statistics can give you further ways to compare groups within your market area.

If you see X’s in some fields, try looking at the 5-year data.

You might look at specifics of income as a way to further illustrate the gap. In your county, what percent of the households had an income of less than $25,000 a year? What income did the top 20 percent have? What percentage had no health insurance? What percentage had incomes below the poverty level, and what age bracket were they?

NOTE: For counties that only have the 3-year data, keep in mind that ACS 3-year is a combination of data from 2008, 2009 and 2010. So, for example, the unemployment rate for the period may be significantly lower than in 2011-12.

For more information about American FactFinder, the FAQ is here: https://ask.census.gov/faq.php?dept=769&id=5000

You can also call the Census Bureau media office at 301-763-3030.

 

 

 

One comment

  1. […] The real reason that I have been delving into Census data was not to torture y’all with quizzes, but to help student journalists learn how to report on income inequality. If you want to know more about the practical steps, check out the post on the NewsNumbers.us site. […]

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