Useful Stats: Income inequality growing nationally and in all states, 2006-2018

From 2006 to 2018, income inequality has risen continuously both nationwide and in all states (but not in the District of Columbia). Annual changes vary widely for state income inequality, with some states experiencing increases year after year, and others displaying more volatile trends consisting of both sharp annual decreases and increases. This edition of SSTI’s Useful Stats examines trends in the Gini index —a measure of household income inequality that increases as the distribution of income becomes more concentrated within a smaller share of the population — at the state level from 2006 to 2018.

As shown in the [interactive] map below, the average Gini index for this period was highest in the Deep South, a portion of New England, and in California. Income inequality was lowest in the Mountain West and upper central states. Including Puerto Rico and the District of Columbia, income inequality was the greatest in Puerto Rico (0.542), the District of Columbia (0.534), New York (0.506), Connecticut (0.490), Louisiana (0.485), and California (Gini index of 0.480).  Income inequality was the lowest in Alaska (Gini index of 0.416), Utah (0.421), Wyoming (0.428), New Hampshire (0.432), and Hawaii (0.434).

However, the increases in Gini indexes has been greater in the states where income inequality is typically lower. As shown in the [interactive] map below, the percentage change in the Gini index has been the greatest in the Mountain West, parts of New England, and parts of the upper Midwest. Specifically, income inequality grew the most in Wyoming (10.3 percent), New Hampshire (8.6 percent), Nevada (8.1 percent), New Mexico (7.0 percent), and Vermont (6.5 percent).  The states that experienced the lowest growth in income inequality include South Dakota (1.25 percent), Colorado (1.4 percent), Puerto Rico (1.4 percent), Hawaii (1.6 percent) and the District of Columbia, which is the only area that experienced a decrease in income inequality (-2.4 percent).

Alaska has historically experienced greater annual volatility, frequently alternating between peaks and valleys every one or two years. Nebraska has experienced similar annual volatility, although to a lesser extreme. While still not at their lowest levels, income inequality in Idaho and North Dakota peaked in 2014 and has since steadily declined, and Colorado has continuously decreased since 2013. Wyoming is counted among the lowest in average income inequality and the highest in average annual increases over this period, which can be explained by the steep drop from 2008 to 2011 and the relatively steady rise (save a minor drop from 2015 to 2016) to its current peak in 2018.

All the information previously mentioned is summarized in the image below. An Excel file containing SSTI’s analysis of the source data is also attached.

Gini Index by State (2006-2018).xlsx