The gap between the richest 1% of the United States and the rest has received a lot of attention on the campaign trail, particularly from Sen. Bernie Sanders's presidential campaign. And rightly so: In 2013, the 1% made 25 times as much as the bottom 99%. But these statistics don't tell the whole story of income inequality. When you look at a more local level, the gaps in fact are much wider.
In New York, Connecticut, and Wyoming, the 1% made 40 times as much as the rest in 2013, according to new analysis from the Economic Policy Institute, a Washington D.C. think-tank that often covers inequality issues. The 1%-versus-the-rest gap was greater than the national average in 165 of 3,064 counties, and 54 of 916 metropolitan areas. In the Jackson metro area of Wyoming and Idaho, the ratio was a staggering 213-times in 2013, making it the most unequal area of the country. (Teton County, in the Jackson metro, was the most unequal county.)
Other areas with big gaps include hedge fund-rich Bridgeport-Stamford-Norwalk, in Connecticut (73.7 times), the Naples-Immokalee-Marco Island, in Florida (73.2), Midland, Texas (44.3) and Glenwood Springs, in Colorado (42.4). States with big income gaps include Georgia, Louisiana, Maryland, Mississippi, Missouri, Nevada, New Jersey, North Carolina, and Virginia.
"The rise in inequality experienced in the United States in the past three-and-a-half decades 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," the report says. "While many of the highest-income families do live in states such as New York and Connecticut, IRS data make clear that rising inequality and increases in top 1% incomes affect every state."
Economists disagree on the causes of inequality, variously blaming technology, globalization, or political choices (like the choice to maintain the carried interest loophole, which lets financial managers treat earnings as capital gains rather than salary income, which is taxed at a higher rate). But, whatever the cause, it's clear inequality is now at near record-levels. The Economic Policy Institute says the 1% earned more than a fifth of all income in 2013, only slightly behind its highest ever share—24% in 1928.
The amount of income you need to join the 1% varies a lot by state. Nationally, the threshold is $389,436. But that wouldn't get you into the country club in Connecticut (where the threshold is $659,979), the District of Columbia ($554,719), New Jersey ($547,737), Massachusetts ($539,055) or New York ($517,557). In Jackson, Bridgeport, and Summit Park, in Utah, you need at least $1 million to live with the economic elite.
Some argue that inequality is the natural result of a competitive economy and it's true that some inequality is a good thing, as it encourages people to strive harder. But too much inequality can be counter-productive as it saps social mobility and hurts the ability of the 99% to consume and spend in the economy. Ultimately, inequality hurts even the 1%, assuming they're invested in this country.
Read more from the report here.
Have something to say about this article? You can email us and let us know. If it's interesting and thoughtful, we may publish your response.
Cover Illustration: iDesign via Shutterstock