The

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

has the greatest income disparity among

developed nations A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...

.United Press International (UPI), 22 Jun. 2018
"U.N. Report: With 40M in Poverty, U.S. Most Unequal Developed Nation"
/ref> However, the inequality indicators vary considerably from state to state. States that have a high concentration of skilled jobs, implement regressive tax policies and have weaker worker protections in general tend to have greater income inequalities. As of 2019, the highest inequality may be observed in

Puerto Rico Puerto Rico (; abbreviated PR; tnq, Boriken, ''Borinquen''), officially the Commonwealth of Puerto Rico ( es, link=yes, Estado Libre Asociado de Puerto Rico, lit=Free Associated State of Puerto Rico), is a Caribbean island and unincorporated ...

, around the

New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...

and Washington, D.C. metropolitan areas, across much of the

Southern United States The Southern United States (sometimes Dixie, also referred to as the Southern States, the American South, the Southland, or simply the South) is a geographic and cultural region of the United States of America. It is between the Atlantic Ocean ...

, in

California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...

, and in

Massachusetts Massachusetts (Massachusett: ''Muhsachuweesut Massachusett_writing_systems.html" ;"title="nowiki/> məhswatʃəwiːsət.html" ;"title="Massachusett writing systems">məhswatʃəwiːsət">Massachusett writing systems">məhswatʃəwiːsət'' En ...

. __TOC__

Reasons of differences in income inequality between US states

In the framework of American federalism, states, in general, have wide latitude to enact policies within their borders, including

state taxation A comparison of tax rates by countries is difficult and somewhat subjective, as tax laws in most countries are extremely complex and the tax burden falls differently on different groups in each country and sub-national unit. The list focuses on ...

and

labor laws Labour laws (also known as labor laws or employment laws) are those that mediate the relationship between workers, employing entities, trade unions, and the government. Collective labour law relates to the tripartite relationship between employee, ...

. Among the factors that may increase the inequality within a given state are regressive state tax policies (with the role of taxation in diminishing inequality increasing since the 1980s),

tax incentives A tax incentive is an aspect of a government's taxation policy designed to incentivize or encourage a particular economic activity by reducing tax payments. Tax incentives can have both positive and negative impacts on an economy. Among the posi ...

for large companies,

corruption Corruption is a form of dishonesty or a criminal offense which is undertaken by a person or an organization which is entrusted in a position of authority, in order to acquire illicit benefits or abuse power for one's personal gain. Corruption m ...

, reduced

trade union A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ...

membership, adoption of

right-to-work law In the context of labor law in the United States, the term "right-to-work laws" refers to state laws that prohibit union security agreements between employers and labor unions which require employees who are not union members to contribute ...

s, lower

minimum wages A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...

, poorer healthcare and increased welfare spending on the poor. Additionally, since the 1970s, income disparities have disproportionately increased in metropolitan areas due to the concentration of high-skilled jobs in urban zones. For example, even though New York is the state with the highest inequality levels in the country, the upstate part of the state has a much lower rate of income inequality than the downstate, as the economy of New York City (Gini index 0.5469) is highly reliant on high-salary earners. States with better financial development tend to be more unequal than those with worse financial opportunities, but the trends go in the opposite directions for high-income and low-income states, with the former actually seeing more equality up to a certain level of development, beyond which the inequality rises non-linearly. While the influx of

foreign direct investment A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct c ...

lessens the disparities at the federal level, this is not necessarily the case for each particular state.

Gini coefficient

The Gini coefficient is a measure of inequality of incomes (or sometimes wealth) across individuals. A score of "0" on the Gini coefficient represents complete equality, i.e. every person has the same income. A score of 1 would represent the case in which one person would have all the income and others would have none. Therefore, a lower Gini score is roughly associated with a more equal distribution of income and vice versa. In 2018 U.S. income inequality as measured by the Gini index was close to the highest recorded values ever. The information was tabulated in 2019 from data from the

American Community Survey The American Community Survey (ACS) is a demographics survey program conducted by the U.S. Census Bureau. It regularly gathers information previously contained only in the long form of the decennial census, such as ancestry, citizenship, educati ...

(ACS) conducted by the

US Census Bureau The United States Census Bureau (USCB), officially the Bureau of the Census, is a principal agency of the U.S. Federal Statistical System, responsible for producing data about the American people and economy. The Census Bureau is part of th ...

. The

South South is one of the cardinal directions or compass points. The direction is the opposite of north and is perpendicular to both east and west. Etymology The word ''south'' comes from Old English ''sūþ'', from earlier Proto-Germanic ''*sunþa ...

, the tri-state area around New York City and

tend to have more income inequality, while the

Upper Midwest The Upper Midwest is a region in the northern portion of the U.S. Census Bureau's Midwestern United States. It is largely a sub-region of the Midwest. Although the exact boundaries are not uniformly agreed-upon, the region is defined as referring ...

, the

Northwest The points of the compass are a set of horizontal, radially arrayed compass directions (or azimuths) used in navigation and cartography. A compass rose is primarily composed of four cardinal directions—north, east, south, and west—each s ...

and Northern New England are relatively more equal. According to the American Community Survey's (ACS) 2019 estimate,

Utah Utah ( , ) is a state in the Mountain West subregion of the Western United States. Utah is a landlocked U.S. state bordered to its east by Colorado, to its northeast by Wyoming, to its north by Idaho, to its south by Arizona, and to its ...

is the most equal state when it comes to income, while

New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * '' ...

is the most unequal by this measure, with the Gini indices, before taxes and transfer, of 0.4268 and 0.5149, respectively. Note that the uncertainties are not shown in the table. The ACS gives a much higher estimate of the Gini coefficient for the United States than other sources.

Shares of income by percentiles

States and territories are sorted by the share of the lowest quintile in aggregate household income, i.e. the share of household income of 20% of the poorest households in the total household income. Due to different methodologies by which the

United States Census Bureau The United States Census Bureau (USCB), officially the Bureau of the Census, is a principal agency of the U.S. Federal Statistical System, responsible for producing data about the American people and economy. The Census Bureau is part of th ...

and the EPI have calculated their results, the data should not be compared.

By households

Data for quintiles and top 5% come from the American Community Survey estimates in 2019.

By families

The data presented in the table comes from the

Economic Policy Institute The Economic Policy Institute (EPI) is a 501(c)(3) non-profit American, left-leaning think tank based in Washington, D.C., that carries out economic research and analyzes the economic impact of policies and proposals. Affiliated with the labor mov ...

(EPI), a think tank, relying on data from 2015 tax returns. The table is sorted according to mean income of families (leftmost column).

Notes

References

External links

U.S. Census Bureau
- Gini index as tabulated in the 2009 American Community Survey {{USStateLists States By Gini Gini Coefficient United States, Gini coefficient