Guess Which States Have The Highest Income Inequality?

March 4, 2014  |  

There are 10 states in which income inequality has grown to incredible heights. This, even though the average real income in the United States rose by more than a third between 1979 and 2007. The problem is the wealth is not being spread across the board to all workers. “In each of the 50 states, income growth among the top 1 percent of earners rapidly outpaced that of the bottom 99 percent, according to a recent study,” reports 24/7 Wall Street.

24/7 Wall St. looked at the 10 states with the most income growth gap using a report published by the Economic Policy Institute (EPI). Alaska, Nevada, Wyoming, Michigan, and Arizona were the top five states.  In these states, the average income increased only for the top 1 percent and dropped for the bottom 99 percent. Also on the list were: Oregon, New Mexico, Hawaii, and Florida. New York came in 10th place. Here, “in the wake of the financial crisis, the average income of the bottom 99 percent fell by 1 percent between 2009 and 2011, while the average income of the top 1 percent rose by 10.7 percent. The wealthiest 1 percent earned, on average, 40.5 times the income of the bottom 99 percent in 2011, more than in all other states except for Connecticut,” reports 24/7 Wall Street.

According to Mark Price, coauthor of the study and a labor economist at the Keystone Research Center, said many think income inequality is centered around Wall Street’s growth.  “It’s not just a story of the financial markets in New York City,” Price said. “Over time, that [top] group in each state is accruing an increasingly larger share of the growth in income.”

GDP also didn’t play a major role in the imbalance growth. “GDP growth was the largest in Nevada, Arizona and Florida between 1979 and 2007 — all among the 10 states with most imbalanced income growth,” reports the site.

And while state tax structures, did not play a large role either, Professor Richard Burkhauser, the Sarah Gibson Blanding Professor of Policy Analysis at Cornell University, said  taxes and transfer payments should not be discounted totally. “Government tax and transfer policies [can] dramatically redistribute income from those who have large amounts of taxable market income to those who do not,” he pointed out.

Despite the reasons, inequality in income growth “is a trend which should concern policy makers independent of the impact of taxes and transfers,” said Paul, and that incomes have still disproportionately increased for the wealthiest one percent.

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