Income Gap Between Rich and Poor Increases in 45 States

Nov 15,2012— -- Inequality between rich and poor has increased in 45 states and the District of Columbia, according to a new report.

A report by Center on Budget and Policy Priorities took data from recent periods of economic growth before the Great Recession and found that income gains were not shared equally. The average income of the richest 5 percent of households is more than 13 times higher than that of the lowest fifth, according to the report.

"Anyone who contributes to the nation's economic growth should reap the benefits of that growth," said Elizabeth McNichol, co-author of the report and senior fellow at the Center. "For decades now, those benefits have been skewed in favor of the wealthiest members of society."

From the late 1990s to the mid-2000s, incomes fell an average of roughly 6 percent among the bottom fifth of households, yet rose by 8.6 percent for the top fifth.

The report detailed inequality state by state. The most unequal were states with large immigrant populations, including New Mexico, Arizona, California and New York.

New Mexico, where Hispanics are the largest ethnicity, is the most unequal state. The average annual income for the bottom 20 percent in the state was $16,300, while the richest 5 percent earned $273,500 on average. The incomes of the top fifth of households were nearly 10 times that of the bottom fifth.

Wages of Hispanics were more likely to be near or at minimum wage, according to New Mexico Voices for Children researcher Gerry Bradley.

"Keep in mind that inequality results in a whole host of social ills," said Bradley. Education achievement, health and longevity, he said, are directly related to income inequality.

Researchers applauded a proposition which raised the minimum wage in Albuquerque to $8.50 and encouraged a statewide increase.

They also recommended making state tax systems less regressive and the addition of supports like unemployment insurance for low-income workers.

"Unequal growth is a problem for people at both ends of the income scale because it affects the ability of the economy to grow in the future," said McNichol.