China's Poverty Reduction Contrasts with Persistent US Income Inequality
China has dramatically reduced the number of people living on less than $3 a day, dropping from 943 million (83% of its population) in 1990 to essentially zero by 2019, according to World Bank data adjusted to 2021 dollars. In contrast, over 4 million people in the United States—about 1.25% of the population—live on less than $3 a day, which is more than three times the level recorded 35 years earlier. This disparity exists despite the US having a per-capita output approximately six times higher than China's, highlighting significant issues with income distribution.
The US has seen a shrinking middle-income share of total income, which declined from 52.5% in 1980 to 42.5% in 2023. Meanwhile, the top 90th percentile of earners have captured a larger share over time. The bottom 10% of US earners receive about 1.8% of the national income, roughly the same share as poor populations in Bolivia; by comparison, lower-income groups in Nigeria receive 3%, China 3.1%, and Bangladesh 3.7%.
Factors such as globalization and automation have contributed to reducing labor's share and rewarding more educated workers, exacerbating income inequality. Recent policy measures, including tariffs imposed during the Trump administration and the Big Beautiful Bill Act, are expected to raise prices for staple goods, slow business investment, and reduce Medicaid and ACA subsidies. According to estimates by Yale Budget Lab, these policies would lower household incomes for all but the richest fifth of Americans, with the bottom 10% potentially experiencing income cuts around 7%.
The article frames US inequality as a long-standing policy feature rather than a temporary issue and contrasts the distributional outcomes with China's significant poverty reduction under an undemocratic regime, without endorsing either approach.
