Where income inequality is highest in the United States

A constantly widening
state of income inequality allows fewer Americans to participate
in the economy.
Samir Hussein/Getty
Images

• Income
  inequality has been steadily rising across the entire
  United States since 1973.
• The incomes of the top 1% grew at a faster rate than
  those of the bottom 99% from 2009-2015, according to a recent
  report published by the Economic
  Policy Institute.
• Aside from areas with a concentration of finance and
  tech executives, the metro areas with the highest levels of
  inequality include resort towns like Jackson Hole,
  Wyoming.
• The 1% have record-breaking percentages of owned wealth
  in five states and 78 counties.
• The high inequality means fewer can participate in the
  economy.
• This article is part of Business Insider’s ongoing
  series on Better
  Capitalism.

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Reactions to the Great Recession like the Occupy Wall Street
movement brought to national attention just how massive the
wealth gap in the United States had become. Even as the economy
recovered, the gap between the top 1% of earners and the rest of
the population has continued to increase.

This is according to
an extensive report on inequality from economists Estelle
Sommeiller and Mark Price, published in July by the Economic
Policy Institute. The authors built on top of research from
economists Thomas Piketty and Emmanuel Saez and used IRS data,
finding that in 2015, five states, 30 metro areas, and 78
counties had exceeded the previous national record for share of
income by the 1%, at 23.9% — a record set in 1929, on the eve of
the Great Depression.

The divide between the rich and poor in the US has continued on
an upward trend since the 1970s, and we live in a time where
economic growth is disproportionately benefitting the wealthiest
Americans.

“In looking at our inequality data I think what most people
expect is what you see in the data, places like New York,
Connecticut and California have high levels of inequality,” Price
told Business Insider. “What I think is often more surprising is
that inequality hasn’t just risen in those places but really in
every state since 1973.”

It’s a scenario that, regardless of political allegiance, results
in a weaker economy where fewer people can participate. The only
ones benefitting are the ultra-wealthy, and it’s why Sommeiller
and Price named their report “The new gilded age,” a reference to
the period following the Civil War when a new upper class thrived
while the country underwent social upheaval.

The authors found the following:

• The average household income of the 1% in 2015 was $421,926.
  The 1% in 13 states and Washington, DC, exceeded this average.
• From the end of the recession in June 2009 through 2015, the
  incomes of the 1% grew at a faster rate than those of the 99% in
  43 states and Washington, DC.
• The 1% captured more than half of all income growth in the
  following nine states in 2015: Connecticut (100%; income declined
  for rest of population), North Carolina (100%), Nevada (81%),
  Florida (77.5%), Maryland (58.4%), Massachusetts (58.4%),
  California (53.1%), Missouri (53.1%), and New York (51.4%).
• That same year, these states have an inequality ratio between
  the 1% and 99% higher than the national average of 26.3%, in
  decreasing order: New York, Florida, Connecticut, Nevada,
  Wyoming, Massachusetts, California, and Illinois.
• The most unequal metro area is Jackson, Wyoming, home of the
  Jackson Hole resort town. Other metro areas with top inequality
  are in similar places like Aspen, Colorado, or Park City, Utah.

“Once you recognize that the primary driver of inequality in the
US is the rise in incomes at the top, especially for executives
in finance and technology, this data begins to make a bit more
sense to people,” Price said, noting that all states tend to
follow trends set by Wall Street and Silicon Valley. 

“And, of course, the companion to these trends is the slow growth
in wages for most workers in pretty much every part of the
country in the last 45 years even as productivity has risen much
faster,” he said, noting that union bargaining power is
about as low as it was in the early 20th century. “The wedge
between wage growth and productivity growth, which is driven most
especially by a decline in bargaining power for workers, is what
is serving up all the extra income at the top.”