America is heading for a level of income inequality that hasn’t been seen since 1928 — yet the richest residents in fives states and 30 cities have already surpassed that threshold, according to a new study.
Unequal income growth since the 1970s has buoyed the fortunes of the top 1 percent of income earners, widening income inequality in every state, the study from the Economic Policy Institute found. Across the country, the top-earning households took home 22 percent of all income in 2015, the latest year for which the IRS has data. That’s just 1.9 percentage points lower than 1928’s record share of 23.9 percent of income.
But that 1928 peak has been surpassed in New York, Florida, Connecticut, Nevada and Wyoming, EPI said. Metropolitan regions that have leapfrogged over the 1928 record include Jackson, Wyoming — home to the resort town of Jackson Hole — and Naples, Florida, a popular retirement location.
The trend is likely to continue, said Mark Price, a labor economist at the Keystone Research Center who co-authored the study with Estelle Sommeiller, a socioeconomist at the Institute for Research in Economic and Social Sciences in France.
“The top 1 percent is capturing a bigger and bigger share of income,” Price said. “That raises questions where voice is often determined by access to money.” He added: “Our concern is that a healthier economy is one where incomes are growing much faster at the bottom than they are.”
A family in the top 1 percent of income earners receives about 26.3 times the income as a family in the bottom 99 percent, the study found. That’s an increase from 2013, when the top 1 percent received 25.3 times as much as the rest of U.S. households.
The trend represents a reversal of what’s often considered the golden years of the U.S. economy, the decades following World War II. While the country was hardly equal during those decades — gender and racial bias was widespread — income growth for both the poor and rich grew at the same pace, EPI noted.
But the 1 percent started taking the lion’s share of income growth after 1973. Since the end of the Great Recession in 2009, the top 1 percent has captured about 42 percent of income growth. In nine states, they’ve gained more than half of income growth.
SOURCE: AIMEE PICCHI