The GINI Index is a statistical method that can be used to measure the distribution of income.  An index of zero represents a condition in which every family earns the same amount.  Higher figures represent greater income inequality among families.  Comparing the income disparities between the top and the bottom 20% of the population provides the most dramatic contrast and tells us about how wide the chasm is between wealth and poverty.

How are we doing?

The GINI Index for Boston has been increasing over the past 40 years.   In 1960, the index stood at 0.335, but by 2000 it had climbed to 0.481.  This change represents the tendency of high wage earners to earn an increasingly greater portion of the total of all family incomes.   For example, in 1960 the top 25% of the families were earning 47.4% of the income.  By 2000 this had increased to nearly 60%.  Most of this gain occurred at the very top of the income scale.  In 2000 the top 3% of families in Boston earned 19.3% of the total of all family incomes, up from 11.6% in 1960.

Another way to look at income inequality is to measure the rate of growth of income for each fifth (20%) of the population.  After adjusting for inflation, between 1990 and 2000 average household income in the City of Boston declined for those in the bottom fifth, grew very modestly for those in the middle three-fifths, and jumped by more than 20% for those in the top fifth. 

Income gaps have also continued to widen on national and global levels.  According to the Porter and van Opstal Competitiveness Index, 40% of US households did not prosper for most of the 1990s, and US income inequality was the highest in the industrialized world.  The US had the highest ranking on the GINI Index, at 0.4, against Japan’s 0.25, Germany’s 0.3, Australia 0.35, and UK’s 0.36.  Between 1985 and 1997, according to the Index, incomes in the US for the bottom quintile stayed the same at about $16,000 per year, while for the top 20%, incomes increased from about $111,000 to almost $140,000 per year.