Income Inequality in Pennsylvania

Pennsylvania

Research shows an association between higher income disparity and poorer overall population health. Income disparity generates chronic stress, which can lead to negative health outcomes.

Income inequality has increased over the past 50 years in the United States, with the top 20% of earners receiving more than half of all U.S. income in 2023. The negative impacts of income inequality on the U.S. economy are expected to worsen in coming years, diminishing gross domestic product (GDP) growth. Compared with other countries, the United States has higher income inequality than most other Organization of Economic Cooperation & Development countries.

Income inequality affects society as a whole. However, those with the lowest incomes suffer the most. Populations more affected by income inequality include:

• Black adults, who consistently have the lowest median income compared with Asian, non-Hispanic white and Hispanic households.
• Women compared with men.
• Adults with low educational attainment. Lower educational attainment is associated with worse jobs and lower earnings.
• Those living in nonmetropolitan areas compared with those living in metropolitan areas.

Investing in education is an effective strategy to reduce income disparity. According to a 2019 study, if every state increased its population of college graduates by 1%, it would increase the national GDP by an estimated $103.5 billion. Another important area of focus for policymakers is redistributive tax policies, such as the earned income tax credit, which has been proven to reduce wealth disparities. The Peterson Institute for International Economics offers additional solutions from inequality experts for reducing income inequality, which include expanding tax policies, improving access to education and child care and increasing the federal minimum wage.

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