Impact of Income Inequality on Workers’ Life Satisfaction in the U.S.: A Multilevel Analysis

Abstract

Over the last two decades, the issue of income inequality has taken center stage in discussions of the economy and how workers’ perceptions of their relative pay affect their overall life satisfaction. Using National Study of Changing Workforce data from 1997 to 2008, this study examined how income inequality affects workers’ life satisfaction in the U.S. Income inequality was measured by calculating each state’s Gini coefficient, a representative inequality index. Results from analysis of multilevel ordered logit models suggest a significant association between income inequality and workers’ self-rated life satisfaction. As income inequality in the U.S. grew dramatically between 1997 and 2008, workers’ self-reported life satisfaction decreased by 33.8 %. Interestingly, this negative impact of income inequality is significant for men, but not for women when analyzed separately. Implications for policy and practice are discussed.