NCPA - National Center for Policy Analysis

Income Gap Varies Among States

January 18, 2000

While the income gap between the rich and poor widened during the 1990s, the size of the gap varied sharply between states. That is the conclusion of a study being released by the Economic Policy Institute and the Center on Budget and Policy Priorities.

  • During the late 1990s, the average income of all families in the top 20 percent of the income distribution was $137,500, according to the study -- more than 10 times as large as the poorest 20 percent of families, which had an average income of $13,000.
  • In nine states -- New York, Arizona, New Mexico, Louisiana, California, Rhode Island, Texas, Oregon and Kentucky -- the average income of the richest fifth of families was more than 11 times as great as the average income of the bottom fifth.
  • States with the narrowest income disparity were Utah, Indiana, Iowa, North Dakota, Colorado, Alaska and Maine.
  • The District of Columbia had the lowest average bottom income of $7,498 and the highest average top income, at $203,110 -- a gap wider than that of any state.

Some economists are questioning the findings because the data don't account for mobility in the lower classes. The study also depends on pretax income data from the Census Bureau -- which doesn't include noncash benefits such as food stamps, or capital gains, but does include dividend and interest payments.

In addition to faulting the study on the data used, Heritage Foundation economists point out that the Census data overlook the greater number of hours wealthy Americans work than low-income Americans.

Source: Constance Mitchell Ford and Patrick Barta, "Income Gap Is Widening Amid Boom," Wall Street Journal, January 18, 2000.

 

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