Income Inequality: The 10 States With the Biggest Wealth Gaps

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 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.

10. Illinois

downtown chicago

Downtown Chicago | Source: iStock

Top 1% average income: $1.2 million

Bottom 99% average income: $48,684

What it takes to join the 1%: $416,319/year

Illinois was the tenth-most unequal state in the country, according to the EPI analysis. The top 1% earned roughly 25 times that of the bottom 99% and claimed 20% of the state’s income, similar to national averages.

The Chicago metro area has the biggest income gap in the state. In the Windy City and surrounding suburbs, the 1% earn an average of $1.4 million every year, compared to $54,239 for everyone else.

9. New Jersey

A homeless man panhandles on the street on October 11, 2012 in Camden, New Jersey. (Photo by Spencer Platt/Getty Images)

A homeless man panhandles on the street in Camden, New Jersey. | Photo by Spencer Platt/Getty Images

Top 1% average income: $1.5 million

Bottom 99% average income: $57,447

What it takes to join the 1%: $547,737/year

Garden State 1-percenters earn 25 times more than the bottom 99% and take home 20% of the state’s total income. The income gap in New Jersey is virtually identical to the nationwide income gap.

Between 2009 and 2013, real income for the top 1% in New Jersey increased 15% but fell 1.4% for the bottom 99%. Essex County has the biggest income gap in the state, with the top 1% earns 45 times more compared to the bottom 99%.

8. Texas

natural gas plant texas

Natural gas is flared off at a plant outside of the town of Cuero, Texas | Spencer Platt/Getty Images

Top 1% average income: $1.3 million

Bottom 99% average income: $48,350

What it takes to join the 1%: $424,507/year

Everything’s bigger in Texas, including the income gap. The state has the eighth-largest gap between the 1% and the 99% in the U.S. The top sliver of families earn 21% of the state’s income and take home 27 times more every year than the typical Texas household.

Midland is the most unequal city in Texas and the eighth-most unequal metro in the country. You’d need to earn $885,806 per year to be part of the city’s 1%. Much of the wealth in this West Texas town is thanks to the oil industry, and the boom-and-bust cycle can make life difficult for those on the lower rungs of the economic ladder, the Texas Tribune reported.

7. California

san francisco cable cars

San Francisco cable cars | Justin Sullivan/Getty Images

Top 1% average income: $1.4 million

Bottom 99% average income: $48,899

What it takes to join the 1%: $453,772/year

Tech billionaires and Hollywood royalty make California a very rich state. The average annual income of the 1% is just over $1.4 million, 29 times the average income of the remaining 99%.

Los Angeles, San Francisco, and San Jose have the biggest gaps between the top 1% and the rest of the population. In San Jose and San Francisco, the 1% earn more than $2 million per year on average. Average salaries for the bottom 99% are higher than in many parts of the country, at $85,042 and $70,994, respectively, but are still nearly 30 times less than the top earners’ income. In Los Angeles, the top 1% take home slightly less — $1.4 million annually – but the 99% are worse off, earning $48,492 per year, on average.

6. Massachusetts

boston skyline

Boston skyline | Photo by Joe Raedle/Getty Images

Top 1% average income: $1.7 million

Bottom 99% average income: $56,115

What it takes to join the 1%: $539,055/year

In Massachusetts, the top 1% of the population earns 30 times the income of the bottom 99%. Nearly one-quarter of the state’s total income goes to the wealthiest residents.

Boston is the most unequal metro area in Massachusetts. The average 1-percenter in Boston earns $1.9 million compared to the $64,135 earned by the typical 99-percenter.

5. Florida

miami florida skyline

Miami, Florida, skyline | ROBERTO SCHMIDT/AFP/Getty Images

Top 1% average income: $1.3 million

Bottom 99% average income: $36,530

What it takes to join the 1%: $385,410/year

Wealthy retirees are behind the Florida income gap, according to the EPI. The top 1% earn 35 times more than the bottom 99% and take home 26% of the state’s total income.

You’d need to earn $959,229 per year to count yourself among the top 1% in Naples-Immokalee-Marco Island, the state’s most unequal metro area. The wealthiest residents of this Gulf Coast city earned an average of $4.2 million per year. Despite the income gap, the Naples area was named the happiest, healthiest city in America, according to a recent Gallup study.

4. Nevada

welcome to las vegas sign

Las Vegas welcome sign | Gabriel Bouys/AFP/Getty Images

Top 1% average income: $1.4 million

Bottom 99% average income: $36,169

What it takes to join the 1%: $311,977

Nevada’s gaming industry is helping to make a tiny portion of the state’s population very rich, according the EPI report, but many other residents are barely scraping by. The bottom 99% in Nevada earn a little over $36,000 per year, on average. Only Mississippi and West Virginia had lower average incomes for the 99%. Real income for Nevadans has fallen 13% since 2009, while income for the top 1% has grown 26%.

Overall, the top 1% in Nevada earn 38 times more than the bottom 99%, capturing 27.5% of all income in the state. Douglas County, adjacent to Lake Tahoe, is the most unequal county in the state, with the top 1% earning 46 times more than the bottom 99% of residents.

3. Wyoming

grand teton national park

Grand Teton National Park | Source: Wyoming Office of Tourism

Top 1% average income: $2.1 million

Bottom 99% average income: $52,196

What it takes to join the 1%: $368,468/year

Wyoming’s official nickname may be the “equality state” (it was the first to grant women the right to vote) but that moniker seems a bit ironic considering the vast gap between the wealthiest citizens and the rest of the state’s residents. The top 1% in Wyoming earn 41 times more than the bottom 99%, taking home an average annual income of more than $2 million. The energy industry in Wyoming contributes to the income inequality between the state’s highest earners and everyone else.

Jackson, Wyoming, was the most unequal metro area in the country. Though the bottom 99% in the resort town near Grand Teton National Park earned an average of $93,891 annually, that number was dwarfed by the $20 million taken home by the city’s top 1% every year. The gap isn’t surprising when you consider Jackson’s reputation as a home for the super-wealthy. Residents include candy heir John Mars, who’s worth $24 billion, and Christy Walton, daughter-in-law of Wal-Mart founder Sam Walton, who’s worth $5.4 billion.

2. Connecticut

a foreclosed home in bridgeport, connecticut

A sign is displayed in front of a foreclosed home on March 12, 2010 in Bridgeport, Connecticut. | Photo by Spencer Platt/Getty Images

Top 1% average income: $2.4 million

Bottom 99% average income: $56,445

What it takes to join the 1%: $659,979/year

Income inequality in Connecticut has increased significantly in the past few decades. From the 1920s to the 1980s, the income spread between the rich and the poor in Connecticut closely mirrored national levels. But beginning in the mid-1980s, the top 1% began to capture a greater portion of the income in the state – 30% compared to the national average of 20%.

Today, the Bridgeport-Stamford-Norwalk metro area is the second-most unequal in the country, with the top earners taking home an average of $6 million per year, 74 times the annual income of the bottom 99%. Overall, the top 1% in Connecticut make 43 times more than the bottom 99%.

1. New York

woman protesting income inequality at Occupy Wall Street

Woman holding a “We are the 99%” sign at an Occupy Wall Street protest | Source: iStock

Top 1% average income: $2 million

Bottom 99% average income: $44,163

What it takes to join the 1%: $517,557/year

The wealthiest New Yorkers earned 45 times more than the bottom 99%. High earners working in the financial sector were partly to blame for the lopsided earnings, according to the EPI report. In Manhattan, the center of the country’s financial industry, the average income of the top 1% was $8.1 million, 116 times more than the bottom 99%.

Overall, the top 1% of families in New York state took home 31% of the income. From 2009 to 2013, average real income for the bottom 99% fell 4%.

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