Income Inequality: The 10 States With the Biggest Wealth Gaps

road sign displaying 'Rich and Poor'

road sign displaying 'Rich and Poor' “Rich and poor” road sign | Source: iStock

Income inequality in the United States is at levels not seen since the late 1920s, according to a new report by the Economic Policy Institute (EPI). In 2013, the top 1% of families in the U.S. made 25 times as much as the bottom 99%, and took home 20% of the nation’s total income. That’s just shy of the 24% of total income claimed by the top 1% in 1928, just before the Great Depression.

After the Great Depression, income inequality in the U.S. shrank. From the 1950s through the late 1970s, the richest 1% of Americans earned between 9% and 11% of the nation’s income. Beginning in the 1980s, the share claimed by the wealthiest began to increase, hitting a high of 24% in 2007. The top earners’ share of the income pie shrank slightly following the Great Recession, but the setback doesn’t appear to be permanent. Between 2009 and 2013, 85% of all income growth in the United States went to the 1%. The top sliver of earners enjoyed average income growth of 17%. Incomes for the bottom 99% grew an average of less than 1%.

The disparity in incomes exists throughout the U.S., though it’s more pronounced in some areas than others. The 1% who live in tech and financial industry hubs have disproportionately high incomes, but even the most “equal” states have income ratios in the double digits. In Alaska, the state where the gap between the top and bottom income earners is least dramatic, the 1% still earn 13 times more than the 99%.

“Rising inequality is not just a story of those in the financial sector in the greater New York City metropolitan area reaping outsized rewards from speculation in financial markets,” according to the report, which analyzed IRS tax return data to gauge income trends on a state, county, and citywide basis. The methodology is the same as the one used by economists Thomas Piketty and Emmanuel Saez in a 2003 paper on income inequality in the U.S., and allows for a more detailed analysis than studies relying on U.S. Census data.

Here are the 10 states with the most income inequality, according to the EPI report.

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