Special Report

25 States With the Widest Gaps Between Rich and Poor

Income inequality exploded as a hot button topic during the presidential campaign with both sides of the political spectrum fighting over how to fix the problem. Although it’s hard to agree on solutions, one fact most concede is that the gap between the rich and the poor in this country has dramatically widened in the recent decade.

According to the Census Bureau, the top 20% of the population earned nearly 52% of all income in the U.S. Those households had an average income of $254,449 in 2019. On the opposite track were the bottom 20% of households that earned 3.1% of U.S. income and annual earnings of $15,286.

The gap between income distribution among rich and poor has been steadily growing since the 1970s. Pew Research estimates between 1970 and 2000, median household income rose by 41 percent to $70,800, driven by an annual average growth rate of 1.2%. However, from 2000 to 2018, two recessions stymied that growth rate to a mere 0.2%. If not for those financial setbacks, the nation’s median income would have followed the same trajectory as 1970 to 2000 and reached $87,000 instead of the current $74,600. 

Moreover, Pew also notes the percentage of middle-income households plunged from 61% in 1971 to 51% in 2019. Pew defines middle-income households as those bringing in a median income of $58,100 in 1970;  $81,700 in 2000, $86,600 in 2018.

Those figures are national. Brushing a broad national stoke on income inequality fails to give a clear picture of how income disparity is a relative term in many ways. Household income — and more importantly, what it can buy — depends on your home state and its cost of living. What’s considered “rich” in a less affluent state might only buy you into the middle class in a high cost of living state like New York. Conversely, high earners in a state with a more affordable cost of living probably get more for their dollars.

In this list, New York State’s ratio of high income to low income earners factored out to 21.83 to 1, pushing it to the top. Median household income for the highest 20% bracket in the Empire State stood at $291,906, fifth highest in the nation. And that figure is growing as New York was one of 16 states where incomes are rising fastest.

If you live in Louisiana, a median income $100,000 less than that — $190,038 — kicks you to the top 20%. On the other hand, the poorest 20% earn $9,426, putting the state’s ratio of 20.16 to 1 at number two. That disparity in incomes is likely a reflection of why Louisiana is the worst state for business.

Click here to see the 25 states with the widest gaps between rich and poor.

To determine the states with the widest gaps between rich and poor, 24/7 Wall St. reviewed for each state the ratio of the richest 20% median income to the poorest 20% median income, using data from the U.S. Census Bureau’s American Community Survey. 

Because ACS income data reflects pre-tax levels, the figures may overstate the degree of income inequality in the poorer quintiles.