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Income inequality in America varies dramatically by state

Income inequality is on the rise: nationwide, the average difference between the top 1 percent of earners and everyone else is $1,047,435 – a factor of 21.4 times, according to a new report.

Connecticut has the biggest wage gap in the U.S., with the typical worker making an average of $67,700 a year compared to $2.5 million at the top, according to the Economic Policy Institute.

Overall, 22 states are home to 1 percenters who make $1 million or more per year on average. Not a single state has an average earnings of $100,000 for the other 99 percent. designed this visualization using data from the Economic Policy Institute to illustrate the state-by-state earnings gap between the richest 1 percent and everyone else. The grey bar represents the gap in each state, while the pink dots represent the average income of the top 1 percent and blue dots represent the average income of the remaining 99 percent

New York was the second most unequal state, with the average worker making $49,600, while the top 1 percent averages $2.2 million, according to

Massachusetts came in third ($61,700 compared to $1.9 million), followed by Wyoming ($60,900 compared to $1.9 million), the District of Columbia ($61,100 compared to $1.9 million) and California ($55,200 compared to $1.7 million).

West Virginia has the smallest gap between the rich and poor, with the top 1 percent averaging $536,000 a year, compared to just $35,000, on average, for everyone else in that state. Mississippi followed, with an average 1 percent salary of $580,000, while the bottom 99 percent averaged $35,400.

It was not (always) a norm to pay your CEO hundreds and hundreds of times what you pay rank and file workers.                                    -Heidi Shierholz, Economic Policy Institute 

However those and many other southern states with lower inequality levels are also ‘widely known for their rural poverty and poor overall public health,’ according to

A key driver of income inequality is wage stagnation, said Heidi Shierholz, senior economist and director of policy at EPI. It’s a problem that emerged following a period of prosperity in the 1950s and 1960s when wages grew along with labor productivity.

‘Then starting in the 1970s you see this shift where productivity continued to grow and wages in the broad middle class completely flattened out,’ Shierholz told ‘We’ve had stagnant wages for most people for most of the period since.’  

A major factor driving wage stagnation was the decline of unions and the resulting erosion of the minimum wage, she said.

‘Minimum wage is more than 25 percent below where it was 25 years ago in real (dollar) terms,’ Shierholz said.

In addition, the Federal Reserve Board has ‘prioritized keeping inflation low over keeping unemployment low,’ further weakening the position of the average worker, she said.

At the same time, taxes have become less progressive, meaning the richest portion of the population pays a smaller share than they used to – which has incentivized higher executive compensation.

‘It was not (always) a norm to pay your CEO hundreds and hundreds of times what you pay rank and file workers,’ Shierholz said. ‘That norm has shifted to giving huge rewards and benefits to people at the very top while pushing down wages of the typical worker.’

‘Part of that shifting norm has been driven by the decline in taxes at the top,’ she added. ‘There’s much less incentive to increase their pay than if the tax rates are very low. If you pay that person another dollar they keep it.’

Roughly half of Americans lived in middle class households in 2016, however income gains among that population were dwarfed when compared to those of the upper-middle class, according to the Pew Research Center.

The proportion of Americans categorized as middle class fell 10 percentage points from 1971-2011, but has remained relatively stable since then.

In addition, middle-class households did better financially in 2016 than they did in 2010, with their median income rising to $78,442 from $74,015 during that period – a 6 percent increase. However, even those gains didn’t put them ahead of where they were in 2000, signaling ‘lingering effects’ of the 2008 recession, according to Pew.