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The US ranks last out of G7 countries, while Nigeria and Singapore are among worldwide governments that are fueling inequality, according to a newly released edition of the Commitment to Reducing Inequality Index developed by Oxfam and Development Finance International.
The Index, which comes ahead this week’s World Bank and International Monetary Fund Annual Meeting in Bali, Indonesia, ranks 157 countries on their policies on social spending, tax, and labor rights - three areas that are critical to reducing inequality.
“The US is the richest country in the world yet it has the worst policies to fight inequality among major industrial countries, leaving tens of millions of working people impoverished, especially women and people of color,” said Didier Jacobs, senior policy advisor at Oxfam America. “President Trump’s agenda, supported by leaders in Congress, will only make things worse, further cementing the American Dream – the ability to work hard and rise up from humble beginnings –as a myth of the past.”
The US ranks 23rd overall in Oxfam’s Index and is one of the worst performing countries in the Organization for Economic Cooperation and Development (OECD). Spending on education and health care is high in the US, but problematic due to inefficiencies and some massive inequalities in spending. The US ranks at the top for public spending on health care as a proportion of total government spending, but Americans experience poor health outcomes, with life expectancy that ranks 31st internationally. More than 24 million adults under age 65 did not have health insurance in 2016, a number estimated to have risen by four million to 15.5 percent by March 2018 as a result of various policies rolling back the healthcare law passed during the Obama administration. Spending on social protection is low relative to other rich countries, and the US also ranks poorly in terms of the impact of social spending on reducing inequality compared to other rich countries.
In line with the historic discrimination against women and people of color, labor policy in the US is very inadequate. The federal minimum wage of $7.25 is well below the $10.60 per hour needed for a family of four to stay above the federal poverty line. The US is also one of only five countries globally that has no paid parental leave (the others are Lesotho, Papua New Guinea, Suriname, and Tonga). This year’s index does not yet take into account the US’s new tax law that came into effect in 2018.
Denmark tops Oxfam’s Index thanks to a long history of policies that have delivered high and progressive taxation, generous social spending, and some of the best protections for workers in the world. However, recent Danish governments are rolling back many of these policies and inequality has risen rapidly. Nigeria ranks last due to low social spending, worsening labor rights violations, and poor tax collection.
This second edition of the Index improves on the methodology used last year by including new indicators on tax dodging and violence against women and relying on more up-to-date sources of data. The new indicator on violence against women reveals that despite the significant gains made in recent months by the #MeToo and other women’s rights movements, less than half of countries have adequate laws on sexual harassment and rape.
“Simply put, inequality traps people in poverty,” said Winnie Byanyima, Oxfam International’s executive director. “We see babies dying from preventable diseases in countries where healthcare budgets are starved for funding, while billions of dollars owed by the richest are lost to tax dodging. We’ve heard from women living on poverty wages and facing hunger, seeing none of the wealth they create. None of this is inevitable. Governments often act like they’re committed to fighting poverty and tackling inequality—this Index shows us if their actions match their promises.”
“What’s most striking is how clearly the Index shows us that combatting inequality isn’t about being the wealthiest country or the one of the biggest economy,” said Matthew Martin, Development Finance International’s director. “It’s about having the political will to pass and put into practice the policies that will narrow the gap between the ultra-rich and the poor. This index clearly lets us see who’s doing that and who’s not.”