The wealth gap in the US is worse than in Kenya

Maasai women queue outside a polling station in Ewaso Kendo, Kajiado West County on August 8, 2017, as the nation goes to the polls in national elections.
Carl De Souza | AFP | Getty Images

Kenya has been called an unsafe place for tourists because of frequent violent crimes. Former president Barack Obama said in a speech that it's time for the country to "change habits" because "too often here in Kenya … corruption is tolerated."

But there is at least one thing the country gets better than the United States: Income equality.

The CIA's Gini index measures a country's inequality in the spread of family income on a reverse zero to 100 scale. "The more unequal a country's income distribution … the higher its Gini index," according to the CIA's website.

"If income were distributed with perfect equality, the index would be zero; if income were distributed with perfect inequality, the index would be 100."

Finland has the lowest, or best, score out of the 149 countries measured, with a 21.5, and Lesotho has the highest, or worst, with a 63.2. Kenya has a middling 42.5 rating, whereas the United States rates even less well with a 45.

The United States also scores worse than Iran.

Spencer Platt | Getty Images

The reason for the poor rating, says urban studies theorist Richard Florida in an interview with Fortune, is that "there's [a] widening gulf in the United States between the 'haves' and the 'have-nots' … brought on by "education and metropolitan zoning restrictions."

He explains that "inequality in New York City is like Swaziland. Miami's is like Zimbabwe, [and] Los Angeles is equivalent to Sri Lanka," adding that, "in the New York metro area, the 95th percentile makes $282,000 and the 20th percentile makes $23,000."

One reason major cities see such a wide wealth gap is that when new generations of workers cluster there, density increases and, therefore, so does property cost and competition.

"Companies are recognizing that talent is critical to their long-term success and that cities are the best place to find it," Bruce Nolop, former Pitney Bowes Inc. and E*Trade chief financial officer, and the author of "The Essential CFO: A Corporate Finance Playbook," tells The Wall Street Journal.

"Metropolitan areas offer ample opportunities to make lateral hires and are popular destinations for the millennial generation."

Not everyone agrees that wealth inequality is a problem.

Jim Iuorio, managing director of TJM Institutional Services, argues that it is vital to growing economies. "An economy that has no wealth inequality will, most certainly, stagnate and die, leaving widespread poverty behind," he says.

"We want and need the right amount of wealth inequality to fuel the creative ambition that leads people to seek a better financial future."

On the other hand, the benefits of that better financial future should be more fairly distributed, others say. "As a society gets richer, its citizens' living standards should rise," Lane Kenworthy, a sociology and political science professor at Harvard University, contends in a blog post. "The poorest needn't benefit the most; equal rates of improvement may be good enough.

"We might not even mind if the wealthiest benefit a bit more than other; a little increase in income inequality is hardly catastrophic," he says.

"But in a good society, those in the middle and at the bottom ought to benefit significantly from economic growth. When the country prospers, everyone should prosper."

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