America is heading for a level of income inequality that hasn't been seen since 1928 -- yet the richest residents in fives states and 30 cities have already surpassed that threshold, according to a new study.
Unequal income growth since the 1970s has buoyed the fortunes of the top 1 percent of income earners, widening income inequality in every state, the study from the Economic Policy Institute found. Across the country, the top-earning households took home 22 percent of all income in 2015, the latest year for which the IRS has data. That's just 1.9 percentage points lower than 1928's record share of 23.9 percent of income.
But that 1928 peak has been surpassed in New York, Florida, Connecticut, Nevada and Wyoming, EPI said. Metropolitan regions that have leapfrogged over the 1928 record include Jackson, Wyoming -- home to the resort town of Jackson Hole -- and Naples, Florida, a popular retirement location.
The trend is likely to continue, said Mark Price, a labor economist at the Keystone Research Center who co-authored the study with Estelle Sommeiller, a socioeconomist at the Institute for Research in Economic and Social Sciences in France.
"The top 1 percent is capturing a bigger and bigger share of income," Price said. "That raises questions where voice is often determined by access to money." He added: "Our concern is that a healthier economy is one where incomes are growing much faster at the bottom than they are."
A family in the top 1 percent of income earners receives about 26.3 times the income as a family in the bottom 99 percent, the study found. That's an increase from 2013, when the top 1 percent received 25.3 times as much as the rest of U.S. households.
The trend represents a reversal of what's often considered the golden years of the U.S. economy, the decades following World War II. While the country was hardly equal during those decades -- gender and racial bias was widespread -- income growth for both the poor and rich grew at the same pace, EPI noted.
But the 1 percent started taking the lion's share of income growth after 1973. Since the end of the Great Recession in 2009, the top 1 percent has captured about 42 percent of income growth. In nine states, they've gained more than half of income growth.
The new Gilded Age
In 1928, the country was enjoying a booming stock market, boosting the wealth of families like the Rockefellers and Mellons to unheard-of levels. They vacationed in resorts like Newport, Rhode Island, leaving the cities for havens of wealth far removed from the centers of industry.
Today, the richest Americans are likewise capable of picking up and moving to resorts and vacation spots, which explains the presence of Jackson, Wyoming, as one of the top spots for income inequality. Jackson Hole is home to a famed ski resort, as well as extremely wealthy patrons like Walmart heiress Christy Walton and actor Harrison Ford.
"We are returning to something that was more common in the late 1800s and early part of 20th century: the idle rich, basically earning income from that accumulated wealth," Price said. "If you're a financial executive, you need to be near Wall Street, but as the 1 percent transition into this different group and are able to live off their wealth, it's possible to live wherever you want."
Differences from 1928
Even as gap between the rich and everyone else widens, the quality of life for the bottom 99 percent has vastly changed since 1928. The social safety net didn't exist during the country's last inequality peak, leaving the poor and elderly to manage without programs like a national pension system or health care.
The EPI study analyzed pre-transfer and pretax income, or earnings excluding the impact of taxes and government benefits like Social Security or unemployment benefits. Those benefits can reduce inequality by raising the incomes of poor and middle-class Americans, while taxes can lower income at the top of the distribution. But the EPI noted that the biggest force for inequality is the increasingly unequal distribution of income.
Americans need at least $421,926 in annual income to break into the top 1 percent, the EPI found. Yet in some states, residents will require much more to be considered among the top 1 percent, such as Connecticut, where the threshold stands at $700,800.
The 5 states where the top 1 percent have exceeded 1928's 23.9 percent share of income:
- New York: 31 percent
- Florida: 28.5 percent
- Connecticut: 27.3 percent
- Nevada: 24.8 percent
- Wyoming: 24 percent
The 30 metropolitan regions where the top 1 percent now control more wealth than in the 1928 peak:
- Jackson, Wyoming-Idaho: 57.1 percent
- Naples-Immokalee-Marco Island, Florida: 47.6 percent
- Key West, Florida: 45.1 percent
- Sebastian-Vero Beach, Florida: 40.4 percent
- Bridgeport-Stamford-Norwalk, Connecticut: 38.6 percent
- Miami-Fort-Lauderdale-West Palm Beach, Florida: 35.9 percent
- Port St. Lucie, Florida: 31.5 percent
- Glenwood Springs, Colorado: 31.2 percent
- Hailey, Idaho: 31.2 percent
- Gardnerville Ranchos, Nevada: 30.9 percent
- Summit Park, Utah: 30.5 percent
- North Port-Sarasota-Bradenton, Florida: 30.3 percent
- New York-Newark-Jersey City, New York-New Jersey-Pennsylvania: 28.5 percent
- Cape Coral-Fort Myers, Florida: 28.2 percent
- Fayetteville-Springdale-Rogers, Arkansas-Missouri: 27.3 percent
- Midland, Texas: 26.5 percent
- Steamboat Springs, Colorado: 26.3 percent
- Easton, Maryland: 26 percent
- Las Vegas-Henderson-Paradise, Nevada: 26 percent
- San Jose-Sunnyvale-Santa Clara, California: 25.9 percent
- Crestview-Fort Walton Beach-Destin, Florida: 25.8 percent
- San Francisco-Oakland-Hayward, California: 25.7 percent
- Santa Maria-Santa Barbara, California: 25.4 percent
- Los Angeles-Long Beach-Anaheim, California: 25.3 percent
- Charlottesville, Virginia: 25.3 percent
- Reno, Nevada: 25.2 percent
- Casper, Wyoming: 24.8 percent
- Corsicana, Texas: 24.7 percent
- Boston-Cambridge, Newton, Massachusetts-New Hampshire: 24.6 percent
- Napa, California: 24 percent
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