Comparing Poverty and Income Inequality in China and the US
In 1990, China had 943 million people living on less than $3 a day (in 2021 dollars), representing 83% of its population. By 2019, the number of Chinese living in extreme poverty had fallen to zero, according to the World Bank. In contrast, more than 4 million Americans, or about 1.25% of the US population, currently live on less than $3 a day, which is more than three times the level recorded 35 years ago.
Income inequality trends in the US have also worsened. The share of middle-income earners relative to the top 90th percentile declined from about 52.5% in 1980 to 42.5% in 2023. The bottom 10% of income earners in the US receive roughly 1.8% of national income. For comparison, this is similar to the poorest populations in Bolivia (1.8%) but lower than in Nigeria (3%), China (3.1%), and Bangladesh (3.7%).
Despite the US having a per capita output six times that of China, the number of abjectly poor Americans exceeds that of Chinese citizens. This disparity is driven by globalization and technological changes that have reduced labor's share of income and widened socioeconomic gaps, benefiting educated workers while automating or displacing less-skilled workers.
Policy measures such as the Trump administration's Big Beautiful Bill Act and tariffs are projected to raise prices and cut key social supports like Medicaid, the Affordable Care Act subsidies, and SNAP benefits. According to the Yale Budget Lab, these policies could reduce incomes for all but the richest 20%, with the bottom 10% facing about a 7% income cut.
The long-term pattern of increasing inequality has persisted through multiple US administrations since Jimmy Carter's, with only limited relief seen during Bill Clinton's presidency and the first term of Donald Trump, largely due to COVID-era subsidies.
