Income Gap Widens In Most States
By Clare Nolan, Senior Writer
Although the roaring economy is finally bringing increasing prosperity to the poorest American families, the gap between rich and poor continued to widen in the 1990s, a new reports finds.
Over the past two decades, the very richest American families have accumulated wealth much faster than everyone else. The wealthiest 20 percent of families now earn on average 10 times more than the bottom 20 percent. Two decades ago, the richest earned no more than 9.5 times more.
The study, by two liberal Washington think tanks, the Center on Budget and Policy Priorities and the Economic Policy Institute, examines the widening gap between rich and poor in all 50 states using census data from the past two decades.
Despite a narrowing of the income gap in the 1990s, the poorest fifth of families have not made up for the decrease in their incomes that occurred in the previous decade. From the late 1970s to the late 1980s, the poorest families actually saw their incomes decrease. In the 1990s, their incomes grew a mere one percent.
Over the same two decades, the top fifth of families saw their incomes rise over 30 percent.
In nine states over the last decade, the poorest 20 percent of families saw their incomes rise faster than the richest 20 percent. But in 37 states, the rich continued to increase their earnings faster than the poor. And in 15 of those 37 states the poor actually lost ground even as the wealthiest families moved ahead.
The middle class did not fair much better. In 43 states, the wealthiest fifth of families experienced growth in income that outpaced those in the middle fifth. In 12 of those states, middle class families saw their incomes fall.
Families in the top 20 percent now bring home $137,490 a year on average, ten times what families in the bottom 20 percent earn. The poorest fifth of American families rely on incomes of about $12,900 a year.
In no state is that gap wider than in New York. New York's richest families are earning $152,000 a year on average, more than 14 times the $10,769 the poorest fifth take in.
Arizona follows close behind, where the divide ranges from $10,801 at the lower end to $141,190 at the top.
New Mexico, Louisiana, California, Rhode Island, Texas, Oregon, Kentucky and Virginia round out the top 10 states with the largest disparities between rich and poor.
Rhode Island's income gap grew the most in the last decade. The poorest fifth in Rhode Island lost $3,781 in the 1990s, while the rich picked up an additional $35,146.
In recent years, the northeastern states -- Connecticut, Rhode Island, New Hampshire, New York, Vermont, Massachusetts and New Jersey, were among the 15 states where the poor grew poorer while the rich grew richer.
Analysts blame the widening divide in these states on the loss of manufacturing jobs during the 1990-1991 recession. Those jobs were not replaced and laid-off workers were forced into lower paying service jobs, advocates say.
The authors call the income divide one of the nation's most severe economic problems. "Economic growth in the 50 states has not been widely shared," said Jaren Bernstein of the Economic Policy Institute.