The New Gilded Age? It’s Everywhere

(AP Photo/Seth Wenig)

The rise in inequality experienced in the United States over the past four-plus decades is not just a story of Wall Street, Hollywood, and Silicon Valley reaping outsized rewards. To be sure, in a new study for the Economic Policy Institute, we find a large share of the nation’s top 1 percent of income concentrated in New York, Los Angeles, and San Francisco. IRS data also make clear, however, that rising inequality and increases in top 1 percent incomes affect every part of the United States. As the first table illustrates, between 1973 and 2015, the top 1 percent of families’ share of income in their states increased in every state.  

The rise in the concentration of income between 1973 and 2007 represents a sharp reversal of the trend that prevailed in the mid-20th century. Between 1928 and 1973, the share of income held by the top 1 percent declined in every state except Alaska. For all of its considerable flaws—pervasive racial, gender, sexual orientation, and ethnic discrimination—the period from the 1940s through the 1970s is often described as a golden age, thanks to broadly shared income growth that saw similar rates of income growth extending from the lowest-paid wage earners all the way up to the highest-paid CEOs. The golden age had massive problems, but high and rising income inequality was not one of them.

The lopsided income growth of the last 42 years has already pushed the income share of the top 1 percent higher than it was in 1928 in 24 states: Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Idaho, Kansas, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Texas, Utah, Virginia, Washington, and Wyoming, as well as in the District of Columbia.

And that’s just the story through 2015, the most recent year in which state level data from the IRS are available. The signature changes in federal policy in the last 12 months—most notably the Republicans’ Tax Cuts and Jobs Act and the Supreme Court’s Janus decision—will no doubt further accelerate the growth in top incomes in the years ahead. Early signs are that the cut in the corporate tax rate, rather than feeding a boom in investment-led wage growth, has instead unleashed a record wave of corporate stock buybacks, which are an important vehicle for top executives to boost their pay. The Janus case—which was funded by a small group of right-wing foundations and individuals—will further weaken the capacity of union movement, especially at the state level, to counter the economic agenda of the top 1 percent, as unions struggle with revenues and fewer resources.

Worse still, absent major political changes, all signs point to a further rise in the concentration of income at the top in America. To get a preview of where the states are headed, we need to look no further than their counties that have the highest concentration of income in the hands of the top 1 percent of families. 

The second table presents the counties within each state with the largest top 1 percent share of income. Here we find the usual suspects, counties in large metropolitan areas that are home to corporate headquarters, mega-banks, and the tech sector. These counties include New York County (Wall Street); Fairfield County, Connecticut (hedge fund land); Suffolk County (Boston); San Mateo County (Silicon Valley); Benton County, Arkansas (Walmart HQ); Fulton County (Atlanta); Montgomery County (Philadelphia suburb); and Maricopa County (Phoenix). Another identifiable group of counties where income concentration is high are resort communities like Teton County, Wyoming (Jackson Hole); Pitkin County, Colorado (Aspen); Blaine County, Idaho (Sun Valley); Douglas County, Nevada (Lake Tahoe); and Summit County, Utah (Park City).

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