What this report finds: Income inequality has risen in every state since the 1970s and, in most states, it has grown in the post–Great Recession era. From 2009 to 2015, the incomes of the top 1 percent grew faster than the incomes of the bottom 99 percent in 43 states and the District of Columbia. The top 1 percent captured half or more of all income growth in nine states. In 2015, a family in the top 1 percent nationally received, on average, 26.3 times as much income as a family in the bottom 99 percent.

Why it matters: Rising inequality is not just a story of those on Wall Street, in Hollywood, or in the Silicon Valley reaping outsized rewards. Measured by the ratio of top 1 percent to bottom 99 percent income in 2015, eight states plus the District of Columbia, 45 metropolitan areas, and 139 counties had gaps wider than the national gap. In fact, unequal income growth since the 1970s has pushed the top 1 percent’s share of all income above 23.9 percent (the 1928 national peak share, according to Piketty and Saez) in five states, 30 metro areas, and 78 counties.

What we can do to fix the problem: The rise of top incomes relative to the bottom 99 percent represents a sharp reversal of the trend that prevailed in the mid-20th century. From 1928 to 1973, the share of income held by the top 1 percent declined in every state for which we have data. This earlier era was characterized by a rising minimum wage, low levels of unemployment after the 1930s, widespread collective bargaining in private industries (manufacturing, transportation, telecommunications, and construction), and a cultural, political, and legal environment that kept a lid on executive compensation in all sectors of the economy. We need policies that return the economy to full employment and keep it there, return bargaining power to U.S. workers, increase political participation by all citizens, and boost public investments in child care, education, housing, and health care. Such policies will help prevent the wealthiest few from appropriating more than their fair share of the nation’s expanding economic pie.
 

Executive Summary

This report, our fourth such analysis,1 focuses on trends in income inequality. It uses the latest available data to examine how the top 1 percent and the bottom 99 percent in each state have fared over the years 1917–2015 and to provide a snapshot of top incomes in 2015 by county and metropolitan area. (Data for our entire series, from 1917 to 2015, are available at go.epi.org/unequalstates2018data.)

This analysis finds, consistent with our previous analyses, that there has been vast and widespread growth in income inequality in every corner of the country. Overall, the growth in incomes of the bottom 99 percent has improved since our last report, in step with a strengthening economy, but the gap between the top 1 percent and everyone else still grew in the majority of states we examine here.
 

Key Findings

In 2015, the top 1 percent of families in the U.S. earned, on average, 26.3 times as much income as the bottom 99 percent—an increase from 2013, when they earned 25.3 times as much.

Eight states plus the District of Columbia had gaps wider than the national gap. In the most unequal—New York, Florida, and Connecticut—the top 1 percent earned average incomes more than 35 times those of the bottom 99 percent.

Forty-five of 916 metropolitan areas had gaps wider than the national gap. In the 17 most unequal metropolitan areas, the average income of the top 1 percent was at least 35 times greater than the average income of the bottom 99 percent. Most unequal was the Jackson metropolitan area, which spans Wyoming and Idaho; there the top 1 percent in 2015 earned on average 132.0 times the average income of the bottom 99 percent of families. The next 16 metropolitan areas with the largest top-to-bottom ratios were Naples-Immokalee-Marco Island, Florida (90.1); Key West, Florida (81.3); Sebastian-Vero Beach, Florida (67.2); Bridgeport-Stamford-Norwalk, Connecticut (62.2); Miami-Fort Lauderdale-West Palm Beach, Florida (55.4); Port St. Lucie, Florida (45.5); Glenwood Springs, Colorado (45.0); Hailey, Idaho (44.9); Gardnerville Ranchos, Nevada (44.3); Summit Park, Utah (43.5); North Port-Sarasota-Bradenton, Florida (43.1); New York-Newark-Jersey City, New York-New Jersey-Pennsylvania (39.4); Cape Coral-Fort Myers, Florida (38.8); Fayetteville-Springdale-Rogers, Arkansas-Missouri (37.2); Midland, Texas (35.7); and Steamboat Springs, Colorado (35.3).

Of 3,061 counties, 139 had gaps wider than the national gap. The average income of the top 1 percent was at least 35 times greater than the average income of the bottom 99 percent in 50 counties. In Teton County, Wyoming (which is one of two counties in the Jackson metropolitan area), the top 1 percent in 2015 earned on average 142.2 times the average income of the bottom 99 percent of families.

There is a wide spread in what it means to be in the top 1 percent by state, metro area, and county.

To be in the top 1 percent nationally in 2015, a family needed an income of $421,926. Thirteen states plus the District of Columbia, 107 metro areas, and 317 counties had local top 1 percent income thresholds above that level.

For states (including the District of Columbia), the highest thresholds were in Connecticut ($700,800), District of Columbia ($598,155), New Jersey ($588,575), Massachusetts ($582,774), New York ($550,174), and California ($514,694).

Thresholds above $1 million could be found in five metro areas (Jackson, Wyoming-Idaho; Bridgeport-Stamford-Norwalk, Connecticut; Summit Park, Utah; San Jose-Sunnyvale-Santa Clara, California; Naples-Immokalee-Marco Island, Florida) and 17 counties.

Looking at the residence of families with incomes above the 2015 national threshold of $421,926 for entering the top 1 percent, we find:

Of all the income received by the national top 1 percent in 2015, half accrued to families in five states: California, New York, Texas, Florida, and Illinois. These five states accounted for about 40 percent of all income in the U.S. (the sum of all incomes including the bottom 99 percent and top 1 percent).

We find the largest concentrations of national top 1 percent income in New York, Connecticut, Florida, Massachusetts, District of Columbia, California, New Jersey, Nevada, Wyoming, and Illinois.

We find the largest concentrations (relative to each metropolitan area’s share of all income) of national top 1 percent income in the following 10 metropolitan areas: Jackson, Wyoming-Idaho; Naples-Immokalee-Marco Island, Florida; Bridgeport-Stamford-Norwalk, Connecticut; Key West, Florida; Summit Park, Utah; Sebastian-Vero Beach, Florida; San Jose-Sunnyvale-Santa Clara, California; Miami-Fort Lauderdale-West Palm Beach, Florida; Hailey, Idaho; and San Francisco-Oakland-Hayward, California.

At the county level, we find the largest concentrations (relative to each county’s share of all income) of national top 1 percent income in Teton County, Wyoming; New York County, New York; Collier County, Florida; Pitkin County, Colorado; Fairfield County, Connecticut; Monroe County, Florida; Westchester County, New York; Palm Beach County, Florida; Marin County, California; San Mateo County, California.

Examining the growth of income over the past century, we find growth was broadly shared from 1945 to 1973 and highly unequal from 1973 to 2007, with the latter pattern persisting in the recovery from the Great Recession since 2009:

Faster income growth for the bottom 99 percent of families between 1945 and 1973 meant that the top 1 percent captured just 4.9 percent of all income growth over that period.

The pattern in the distribution of income growth reversed itself from 1973 to 2007, with over half (58.7 percent) of all income growth concentrated in the hands of the top 1 percent of families.

So far during the recovery from the Great Recession, the top 1 percent of families have captured 41.8 percent of all income growth. The distribution of income growth has improved since our last report, when we found that the top 1 percent had captured 85.1 percent of income growth between 2009 and 2013.

From our 2016 report to this one, cumulative income growth during the recovery for the top 1 percent increased from 17.4 percent (looking at changes from 2009 to 2013) to 33.9 percent (2009 to 2015)—almost doubling. Among the bottom 99 percent, cumulative growth increased from 0.7 percent to 10.3 percent—growing to nearly 15 times what it was. The bigger relative improvement in growth for the bottom 99 percent (reflecting a strengthening economy) is why the top 1 percent captured a smaller share of income growth from 2009 to 2015 than from 2009 to 2013. Nevertheless, the average income of the top 1 percent still grew faster than the average income of the bottom 99 percent, thus the top-to-bottom ratio continued to increase.

We find a similar pattern in the distribution of growth by state:

In 49 states and the District of Columbia, the top 1 percent captured a larger share of all income growth from 1973 to 2007 than in the earlier period (1945 to 1973).

In 25 states, the top 1 percent captured half or more of income growth from 1973 to 2007. So far in the recovery, from 2009 to 2015, the average income of the top 1 percent has grown faster than the average income of the bottom 99 percent in 43 states and the District of Columbia. In nine states, the top 1 percent captured half or more of all income growth: In Connecticut and North Carolina, the top 1 percent captured all the income growth from 2009 to 2015 (while income declined for the bottom 99 percent); the other states are Nevada (81.0 percent), Florida (77.5 percent), Maryland (58.4 percent), Massachusetts (58.4 percent), California (53.1 percent), Missouri (53.1 percent), and New York (51.4 percent).

The top 1 percent has steadily captured a growing share of the benefits of America’s economic growth, with the share of all income going to the top 1 percent moving closer in 2015 to its 1928 peak.

Overall in the U.S., the top 1 percent took home 22.03 percent of all income in 2015. That share was just 1.9 percentage points below the 1928 peak of 23.9 percent.

Five states had top 1 percent income shares above 23.9 percent in 2015. Those states include New York (31.0 percent), Florida (28.5 percent), Connecticut (27.3 percent), Nevada (24.8 percent), and Wyoming (24.0 percent).

Thirty metro areas had shares above 23.9 percent in 2015. Shares were highest in Jackson, Wyoming-Idaho (57.1 percent); Naples-Immokalee-Marco Island, Florida (47.6 percent); Key West, Florida (45.1 percent); Sebastian-Vero Beach, Florida (40.4 percent); Bridgeport-Stamford-Norwalk, Connecticut (38.6 percent); and Miami-Fort Lauderdale-West Palm Beach, Florida (35.9 percent).

Seventy-eight counties had shares above 23.9 percent. Shares were highest in Teton County, Wyoming (59.0 percent); New York County, New York (53.3 percent); La Salle County, Texas (48.2 percent); Collier County, Florida (47.6 percent); Monroe County, Florida (45.1 percent); Palm Beach County, Florida (44.0 percent); Pitkin County, Colorado (42.2 percent); San Miguel County, Colorado (41.1 percent); Walton County, Florida (40.9 percent); Indian River County, Florida (40.4 percent); Martin County, Florida (40.3 percent); and Fairfield County, Connecticut (38.6 percent).

Originally published by Economic Policy Institute