Rich States, Poor States


The New York Times
By: Andrew Gelman
June 10, 2013

1.8: it's the ratio of average personal income in the richest state to that in the poorest state in 2012.

The number may not be all that surprising, nor are the rankings of the states: Connecticut is richest, with an income of $59,000 per capita, followed by Massachusetts, New Jersey and New York; Mississippi is poorest, at $33,000. What is striking is a much older number: 5.1, the ratio in 1930.

This means that the disparity between the richest and poorest states has shrunk by almost two-thirds in 80 years. And actually, it happened much faster than that, thanks to an array of powerful social and economic trends.

Government spending in the Great Depression and World War II hastened the transfer of income from North to South. Growing prosperity, migration and mobility had the same effect. By 1976 the ratio of average income in richest and poorest states had declined to 1.7 (excluding the anomaly of Alaska, with its huge resources and tiny population in its early years of statehood), and it has held fairly steady since then.

Though the disparity has shrunk sharply, the rankings of rich and poor states have changed little. In 1929 the richest state was New York, at $16,000 per capita (in 2013 dollars), followed by Delaware and Connecticut. In last place was South Carolina, at $4,000, and Mississippi was next to last.

Yet while income inequality among states has been falling, the pattern among individuals and families tells a different story. The economists Thomas Piketty and Emmanuel Saez report that in 1930, the top 1 percent of Americans received 17 percent of the nation's total income. Their share declined steadily until 1975 -- to a mere 8 percent. But since then the number has been creeping back up, and it now stands again at 17 percent.

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This page contains a single entry by CFED published on June 12, 2013 4:23 PM.

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