A state-by-state examination finds that income inequality has grown in most parts of the country since the late 1970s. Over the past three business cycles prior to 2007, the incomes of the country’s highest-income households climbed substantially, while middle– and lower-income households saw only modest increases.
During the recession of 2007 through 2009, households at all income levels, including the wealthiest, saw declines in real income due to widespread job losses and the loss of realized capital gains. But the incomes of the richest households have begun to grow again while the incomes of those at the bottom and middle continue to stagnate and wide gaps remain between high-income households and poor and middle-income households in every state.
- As of the late 2000s, the poorest fifth of households across all states had an average income of $20,510, while the top fifth had an average income of $164,490—eight times as much. In 15 states, this top-to-bottom ratio exceeded 8.0. New Mexico, Arizona, California, Georgia, New York, Louisiana, Texas, Massachusetts, Illinois, and Mississippi face the largest gaps.
- The average income of the top 5 percent of households was 13.3 times the average income of the bottom fifth in the late 2000s. The states with the largest such gaps were Arizona, New Mexico, California, Georgia, and New York, where the ratio exceeded 15.0.
- The 2000s were a lost decade for low– and middle-income households in nearly every state. From the late 1990s to the mid 2000s, incomes fell by close to 6 percent among the bottom fifth of households, on average, while rising by 8.6 percent among the top fifth, during this period. Incomes grew even faster—14 percent—among the top 5 percent of households. For the middle fifth of households, incomes grew by just 1.2 percent.
- Income inequality has been on the rise for decades in every state. Since the 1970s, rich households’ incomes have grown much faster in every state than have the incomes of poor and middle-income households. In contrast, from World War II through the mid 1970s, the gains of economic growth were more evenly shared across the income scale. The states with the largest growth in inequality since the late 1970s were Connecticut, Massachusetts, New York, Kentucky, and Illinois.