Income inequality has grown in nearly every state in the country over the last three decades and continues to climb across the nation, according to new report from the Center on Budget and Policy Priorities and the Economic Policy Institute.
While a slow recovery from the Great Recession for middle- and low-income families has exacerbated income inequality in the short-term, government policies that are preferential to the wealthy and the long-term stagnation of wages have caused significant growth in the gap between the wealthiest 20 percent of Americans and the poorest fifth, the report found. Across the country, the richest 20 percent make eight times more than the average income of the bottom 20 percent, a ratio that didn’t exist in a single state 30 years ago:
In the United States as a whole, the poorest fifth of households had an average income of $20,510, while the top fifth had an average income of $164,490 — eight times as much. In 15 states, this top-to-bottom ratio exceeded 8.0. In the late 1970s, in contrast, no state had a top-to-bottom ratio exceeding 8.0.
Nationally, the richest fifth experienced more in income gains ($2,550 per year) each year during the three decade period than the bottom fifth experienced over the entire 30 years ($1,330). For the richest 5 percent, the gap was even bigger: in 11 large states the study examined, average incomes for the top 5 percent rose by more than $100,000. The largest increase any state experienced for the bottom 5 percent was just $5,620.
Much of the explanation for rising income inequality lies in wage stagnation, rising pay at the top of the income scale, and preferential tax rates for the wealthy. Pay for chief executives rose 127 times faster than worker pay over the last 30 years, according to one recent study. At the same time, tax rates for the richest Americans have plummeted, leaving the country with more inequality than places like Ivory Coast, Pakistan, and even Ancient Rome.