China's Success in Poverty Reduction Contrasts with Rising Extreme Poverty in the United States
Between 1990 and 2019, China achieved a remarkable reduction in extreme poverty, lowering the number of people living on less than $3 a day (2021 dollars) from 943 million to zero. In contrast, the United States has seen a worsening in extreme poverty over the past 35 years, with more than 4 million people—approximately 1.25% of the population—currently living on less than $3 per day, a figure more than three times the level in 1990.
Income inequality has also widened in the United States. The share of income earned by middle Americans relative to the top 90th percentile declined from about 52.5% in 1980 to 42.5% in 2023. The poorest 10th percentile earns roughly 1.8% of the national income, which is lower than in countries such as Nigeria (3%), China (3.1%), and Bangladesh (3.7%). Globalization and automation have contributed to this trend by reducing labor's share of income and increasing gaps between skilled and less-skilled workers.
Policy decisions have also played a significant role. Since President Jimmy Carter's administration, income growth for the rich has outpaced that of the poor in most administrations, with notable exceptions during President Clinton's administration and Trump's first term, which included pandemic-related subsidies. However, Trump's policy agenda, including the Big Beautiful Bill Act and tariffs, is expected to reduce household income for all but the richest fifth of Americans. Estimates from the Yale Budget Lab suggest the bottom 10% could face about a 7% income cut.
The situation highlights the United States' failure to effectively share wealth, which is viewed as a policy choice in contrast to China's governmental measures that successfully eradicated extreme poverty under an authoritarian regime. This contrast prompts reflection on the direction of future policy to address poverty and income inequality in the United States.
