Report Examines Regional Differences in Post-Recession Income Inequality

More than 85 percent of the nation’s total income growth between 2009 and 2013 went to the top 1 percent of earners, according to a recently released report from the Economic Policy Institute (EPI). Furthermore, the top 1 percent captured at least half of all income growth in 24 states between 2009 and 2013, and the entirety of income growth in 15 of those states during the same timeline. Since the 1970s, every state has seen a rise in income inequality, as measured by the ratio of top 1 percent to bottom 99 percent income, according to the report. While similar studies have analyzed this issue at the national or state level, this report marks the first time income inequality has been assessed by metropolitan area and by county, according to an EPI press release.  The authors also measure the distribution of the income generated by the economy since the end of the Great Recession, observing that the average income of the bottom 99 percent in the United States grew by 0.7 percent between 2009 and 2013, compared to a 17.4 percent increase for the top 1 percent of earners.

In Income Inequality in the U.S. by State, Metropolitan Area, and County, the authors, Estelle Sommeiller  of France’s Institute for Research in Economic and Social Sciences (IRES) and Mark Price and Ellis Wazeter of the Keystone Research Center provide an extensive overview of regional changes in income inequality. The report, which includes detailed data tables, sheds light on the geographic dispersion of inequality.

The most unequal states in 2013 were New York, where the ratio of top 1 percent income to bottom 99 percent income was 45.4, Connecticut (42.6), and Wyoming (40.6), while Alaska (13.2), Hawaii (13.5), and Iowa (13.9) had the lowest levels of income inequality, according to the report. Among four broadly defined regions, the Northeast (31.9) and the West (25.1) had the highest levels of inequality, while the South (22.8) and the Midwest (20.1) exhibited lower levels. Generally speaking, with the exception of Wyoming, those states with higher populations were more likely to have higher levels of inequality.

Income inequality in Wyoming stems largely from the Jackson, WY, metropolitan statistical area, which had, by far, the largest income inequality in the United States. The top 1 percent of earners in the Jackson area, a category that includes heirs to both the Wal-Mart and Mars fortunes, made 213 times the income of the bottom 99 percent in 2013. Bridgeport, CT (73.7 top-to-bottom ratio), had the second-highest level of inequality, followed by three Florida metro areas – Naples (73.2), Sebastian-Vero Beach (63.5), and Key West (58.5). The metropolitan areas with the lowest levels of income inequality in 2013 were Junction City, KS (5.9 top-to-bottom ratio), Fort Leonard Wood, MO (6.3), and Los Alamos, NM (6.7). The low level in Los Alamos, which is home to the Los Alamos National Laboratory, is perhaps interesting, as the region also had the highest concentration of millionaires in the United States in 2013, according to Kiplinger’s.

In addition to examining levels of income inequality, the authors also measure the distribution of the income generated by the economy since the end of the Great Recession. They observe that the average income of the bottom 99 percent in the United States grew by 0.7 percent between 2009 and 2013, compared to a 17.4 percent increase for the top 1 percent of earners. Between 2009 and 2013, the top 1 percent captured between half and all income growth in 24 states, and in 15 states the average income of the bottom 99 percent fell while the average income of the top 1 percent increased. Just five states (Alabama, Alaska, Montana, New Mexico, and West Virginia) saw the incomes of the top 1 percent decline as the average income of the bottom 99 percent grew between 2009 and 2013, while two states – Delaware and Hawaii – and the District of Columbia experienced income declines for both groups.

To conclude their report, the authors recommend policies that would “return the economy to full employment, return bargaining power to U.S. workers, and reinstate the cultural taboo on allowing CEOs and financial-sector executives at the commanding heights of the private economy to appropriate more than their fair share of the nation’s expanding economic pie.” Furthermore, they note that because the “1 percent economy” is evident across every region in the United States, they are hopeful this data on income inequality will spur more places to enact bold policies that prompt change. 

Income Inequality in the U.S. by State, Metropolitan Area, and County can be read online here: http://www.epi.org/publication/income-inequality-in-the-us/

Data for the report can be downloaded in Excel format here: http://go.epi.org/unequalstates2016data