Income Inequality Soars In
Every US State
By Andre Damon
January 31, 2015 "ICH"
- "WSWS"
- - Income inequality has grown in
every state in the US in recent decades,
according to a new study published this week
by the Economic Policy Institute. The
report, entitled The Increasingly
Unequal States of America, found that,
even though states home to major
metropolitan financial centers such as New
York, Chicago, and the Bay Area had the
highest levels of income inequality, the gap
between the rich and the poor has increased
in every region of the country.
“It doesn’t matter if you’re
looking at Hawaii or West Virginia or New
York or California, there has been a
dramatic shift in income towards the top,”
said Mark Price, an economist at the
Keystone Research Center in Harrisburg,
Pennsylvania, and one of the study’s
co-authors, in a telephone interview.
Source:
Economic Policy Institute
The report noted that
between 2009 and 2012, the top one percent
of income earners captured 105 percent of
all income gains in the United States. This
was possible because during this period the
average income of the bottom 99 percent
shrank, while the average income of the top
one percent increased by 36.8 percent.
To varying degrees, this
phenomenon was expressed throughout the
country. In only two states did the income
of the top one percent grow by less than
fifteen percent.
The enormous concentration
of wealth in the top 1 percent was even
further concentrated in the top .01 percent.
In New York, for instance, someone had to
make $506,051 per year to be counted in the
top one percent, but $16 million to be in
the top .10 percent. The average income
within the top .01 percent in New York was a
staggering $69 million.
“Most of what’s driving
income growth are executives in the
financial sector, as well as top managers
throughout major corporations,” said Dr.
Price. “Those two together are the
commanding heights of income in this
economy.”
Dr. Price and his
co-author, Estelle Sommeiller, based their
study on the methods of Thomas Piketty and
Emmanuel Saez, whose widely-cited research
analyzed the growth of income inequality for
the United States as a whole. Using
state-by-state data from the Internal
Revenue Service, much of which had to be
compiled from paper archives dating back
almost a century, Price and Sommeiller were
able to make a state-by-state analysis of
income inequality since 1917.
Nationwide, the average
income of the top one percent of income
earners is 29 times higher than the average
income of the bottom 99 percent. But in New
York and Connecticut, the average income in
the top 1 percent is 48.4 amd 51.0 times
higher than the average for the rest of
earners, respectively.
New York City is the home
of Wall Street and boasts more billionaires
than any other city in the world.
Connecticut is home to many of the largest
hedge funds in the world. Ray Dalio, the
founder of Westport, Connecticut-based hedge
fund Bridgewater Associates, earned $3
billion in 2011 alone.
While the average income
of the bottom 99 percent of income earners
in New York state was $44,049, the average
income of the top one percent was
$2,130,743. For the United States as a
whole, the top one percent earned on average
$1,303,198, compared to an average income of
$43,713 for the bottom 99 percent.
In California, the most
populous US state, the top one percent
received an average income of $1,598,161,
which was 34.9 times higher than the average
pay of the bottom 99 percent. In 2013, four
of the highest-paid CEOs in the United
States were employed by technology
companies, which are disproportionately
located in California. At the top of the
list was Oracle CEO Larry Ellison, with a
current net worth of $53.4 billion, who made
$78 million in pay that year.
The study shows that the
average income for the bottom 99 percent of
income earners is relatively consistent
across states, with no state showing an
average income more than 33 percent above or
below the average for the whole country.
The average incomes of the
top one percent varied widely, however: from
$537,989 for West Virginia to $2.1 million
in New York. According to Forbes,
the wealthiest resident of West Virginia is
coal magnate Jim Justice II, who, with a net
worth of $1.6 billion, is the state’s only
billionaire. New York City, by contrast, has
four residents worth more than $20 billion,
including chemical tycoon David Koch, with a
net worth of $36 billion; former Mayor
Michael Bloomberg, with a net worth of $31
billion; and financiers Carl Icahn and
George Soros, worth $20 billion apiece.
Yet despite the broad
disparity in the relative concentration of
the ultra-rich, every single state showed a
pronounced and growing chasm between the
wealthy few and the great majority of
society. In Alaska, which has relatively
high wages and few billionaires, the incomes
of the top one percent were on average more
than fifteen times higher than the bottom 99
percent.
The report noted that
exploding CEO pay has set “new norms for top
incomes often emulated today by college
presidents (as well as college football and
basketball coaches), surgeons, lawyers,
entertainers, and professional athletes.”
Price added, “As the
incomes of CEOs and financiers are rising,
you’re starting to see that pull, almost
like a gravity starting to pull up other top
incomes in the rest of the economy.
“A University president
might claim, ‘I run a big institution, you
expect me to raise money from some of the
wealthiest people in the country, you’ve got
to pay me a salary that helps me socialize
with them.’”
Price said that, while
inequality figures are not available
nationwide on the local level, his work on
income inequality in the state of
Pennsylvania shows that income inequality is
growing in counties throughout the state, in
both rural and urban centers.
Nationwide, the income
share of the top one percent fell by 13.4
percent between 1928 and 1979, a product of
the New Deal and Great Society reforms, as
well as higher taxes on top earners. These
measures were the outcome of bitter and
explosive class struggles. But in subsequent
years, that trend has been reversed.
As a result, income
inequality in New York State was even higher
in 2007 than it was in 1928, during the
“roaring 20s” that gave rise to the Great
Depression. In the period between 1979 and
2007, every state saw the income share of
the top 1 percent grow by at least 25
percent.
Source:
Economic Policy Institute
Citing a previous study by
the Economic Policy Institute, the report
noted that “between 1979 and 2007, had the
income of the middle fifth of households
grown at the same rate as overall average
household income, it would have been $18,897
higher in 2007—27.0 percent higher than it
actually was.”
The enormous growth of
social inequality is the result of an
unrelenting, decades-long campaign against
the jobs and living standards of workers.
Under the Obama administration, the
redistribution of wealth has escalated
sharply, through a combination of bank
bailouts and “quantitative easing,” which
has inflated the assets of the financial
elite.
These policies have been
pursued by both parties and the entire
political establishment, which is squarely
under the thumb of the corporate and
financial oligarchy that dominates American
society.