Wednesday, April 9, 2008

Income Gap By State

An article in today's Times, Income Gap in Connecticut Growing Fastest, Study Finds, marks CT as the place not to be if you are poor. Put NY up there as well (highest income gap among 50 states), and certainly DC (highest income gap, period).

The newly released study took family incomes from 2004 to 2006, and compared them to an inflation adjusted period of 1987 to 1989. The study is not so surprising; everyone knows that minimum wage hasn't moved in tandem with market wages. While CT's spike of a 45 percent increase for its top fifth of households is not a shocker (I've seen those Land Rovers on the Merritt Parkway), it is a little bit of a WTF that the bottom fifth actually dropped 17 percent.

Some other sobering stats:

    New York had the highest income gap among the 50 states in 2004 to 2006, according to the study, with the top fifth earning an average of $148,200 a year, or 8.7 times the $17,100 income at the bottom. Connecticut ranked seventh and New Jersey, where the rich earned 7.5 times what the poor did, was 14th. (The rankings did not include Washington, D.C., which had by far the biggest income gap, with the rich earning an average of $188,500, the highest income in the country, 13.5 times the poor’s $14,000 average.)

    The study’s authors adjusted family income for federal taxes but not state and local taxes. So the study may not accurately capture the gap in high-tax states like New York that tax high earners for the benefit of those who are struggling.


Of course, the article goes on to make brief mentions on tax policy. I am no expert on taxes, but I like that NY taxes its high earners. What I don't like is that NY state spends more of its tax dollars on its prison industry than its universities. See, the thing about tax policy chatter is that it fills the room with a lot of talk about how a state gets money, rather than what the state does with it. And that's one stunted conversation on tax policy.

4 comments:

asgreen said...

I grew up in CT and it is really sad what's happenning. While there have always been towns like Greenwich and Wesport, towns like Stamford and Norwalk actually had a lot of diversity in both income and race. Now you see more and more people moving into Stamford and Norwalk, driving up prices, and then sending their kids to private school. So the schools in these towns are failing and its becoming harder and harder for people to get out of the projects.

It's very frustrating.

PiggyBankBlues said...

asgreen-
i can only imagine. CT is very interesting to me, because of its close proximity to nyc and hedge fund mecca it has a reputation as a leafy enclave. and while i know there is a ton of diversity in its larger towns/cities, i always wonder how people from lower income brackets manage to survive. who knew they were making less and less money each year!

elaine said...

sad to hear ny state spends more on prisons than universities. it puts education at the mercy of private wealth and turns schools into institutions that preserve/expand existing imbalances. for example, a comparative literature class gets no budget but one on global finance gets gazillions. sounds like training for the "real" world! thanks for ur post.

minimum wage said...

The income gap will continue to increase. The unskilled labor class will implode into deep poverty. Get used to it.