State ranks high in disparity of income gains since recession
A report concludes that in Washington and and 16 other states, all the income growth from 2009 to 2012 went to the top 1 percent.
Seattle Times business reporter
While the Great Recession dealt a blow to all income levels, the economic recovery has disproportionately favored the top 1 percent — and Washington is among the states where that disparity is most lopsided.
Indeed, in Washington and 16 other states, all the income growth between 2009 and 2012 went to the top 1 percent.
That’s according to a report released this week by the liberal Economic Policy Institute that analyzed Internal Revenue Service data and shows, state by state, the disparity in income growth over the past decades.
Overall, from 1979 to 2012, the bottom 99 percent in the state saw their incomes fall by 3.4 percent, while the top 1 percent saw theirs rise by 188.5 percent.
Until the recession, the 99 percent were at least on a slow upward path: Between 1979 and 2007 in this state, the average income of the bottom 99 percent grew by 13.9 percent, while that of the top 1 percent grew by 222.3 percent, according to the report.
But between 2009 — about when the economic recovery began — and 2012 — the most recent year for which state data is available — the average income of the bottom 99 percent fell 3.5 percent, while that of the top 1 percent grew 45 percent.
The report defines the top 1 percent in Washington as those making at least $378,569 in 2012.
The average income of the top 1 percent in Washington — at $1.27 million — was almost 27 times greater than that of the 99 percent — at $47,517.
That placed Washington 10th among the states in the ratio of top-1-percent income to bottom-99-percent income.
Among the reasons for the gap here is the booming tech sector, said Mark Price, an economist with Keystone Research Center and co-author of the report.
In the two states where the gap was widest — Connecticut and New York — the high concentration of residents who work in the finance sector was a factor.
Other states where the gaps are highest include Nevada, Florida, California, Massachusets, Texas, Illinois and New Jersey.
The states with the lowest gaps included Hawaii, Alaska, West Virginia, Maine and Iowa.
“The benefits of economic growth ... have increasingly been flowing to this tiny percentage of households,” said Price.
Price and co-author Estelle Sommeiller, a socioeconomist at the Institute for Research in Economic and Social Sciences, found that income disparity has been widening in all states since 1979, and especially in recent years, to a level not seen since the 1920s.
Among the consequences of the growing gap, the authors note, may be a reduced ability for future generations to move up the economic ladder.
“More than in most other advanced countries, in America the children of affluent parents grow up to be affluent, and the children of the poor remain poor,” the report says.
Even before the recovery, the income-growth gap had been widening nationally, with the average income of the bottom 99 percent growing by 18.9 percent between 1979 and 2007, while that of the top 1 percent grew by 200.5 percent, according to the report.
But between 2009 and 2012, only the top 1 percent made gains nationally, as the average income of the bottom 99 percent fell by 0.4 percent, while that of the top 1 percent grew by 36.8 percent.
“In the next decade, something must give,” the report concludes. “Either America must accept that the American Dream of widespread economic mobility is dead, or new policies must emerge that will begin to restore broadly shared prosperity.”