A new study shows inequality of personal income in the United States is approaching levels last seen 90 years ago, on the eve of the Great Depression.
Leading the nation with the greatest divide between the wealthiest 1 percent of residents and the other 99 percent was New York state, according to the report by the Economic Policy Institute, a left-leaning think tank in Washington, D.C.
The average 2015 income of the top 1 percent in New York state was $2.2 million, while the average income of the bottom 99 percent was $49,617, the report said — a ratio of 44.4 to 1.
Nationally, the numbers were $1.32 million and $50,107, a 26.3-to-1 ratio.
The Albany-Schenectady-Troy metropolitan area was much closer to the national average, at $1.33 million, $47,724 and 27.8-to-1.
Within the Capital Region, the disparity was greatest in Saratoga County, ranked No. 28 out of 3,061 U.S. counties with $2,549,869 a year on average for the top 1 percent and $56,124 for the bottom 99 percent.
Report authors Marc Price and Estelle Sommeiller mined U.S. Internal Revenue Service data to compile the income estimates. Both authors are employed by think tanks supported by organized labor, Sommeiller at the Institute for Research in Economic and Social Sciences in France and Price at the Keystone Research Center in Pennsylvania.
Price said the orientation of the authors, their employers and the Economic Policy Institute alike favors policies that benefit working people. The title of the study is “The New Gilded Age,” harkening back to the era where the United States grew rapidly as an industrial power and the top 1 percent of wage earners, industrialists such as Andrew Carnegie, developed fabulous wealth.
At some point — Price doesn’t think America is there yet — the wealthiest people claim so much of the national income that the standard of living for most other people decreases.
“Our view is that we certainly want the idea of the American Dream to be a real and tangible thing,” he said.
Price said slowing or stopping the growing income disparity would be a long-term effort that might not begin to yield results for years, and then only slowly. Increased bargaining power for workers, such as through unions, a more progressive tax code, and a higher minimum wage are things that could bring change.
“If you reverse these things — and those are heavy lifts — what will happen is gradually you’ll see more wage growth,” he said.
Ironically, the state with the greatest income split, New York, is also the mostly heavily unionized in a nation where organized labor has lost much of its size and influence since the mid-1900s. New York also has one of the highest minimum wages in the nation.
But New York state’s numbers are skewed by New York City, one of the wealthiest places in the nation. Manhattan’s top 1 percent pulled down an average of $8.98 million in 2015, 113 times more than the average $79,528 income of the bottom 99 percent of Manhattan residents.
The head of the Capital Region’s economic development agency, the Center for Economic Growth, noted that this area fared well in a 2017 study by another Washington think tank, the Brookings Institution.
CEO Andrew Kennedy said “Metro Monitor” showed that Albany-Schenectady-Troy was one of only four large metro areas in the nation that recorded positive results in four key metrics in the wake of the Great Recession, from 2010 to 2015: Growth, increased prosperity, overall societal benefit from growth and benefit for all races.
Via email, Kennedy said: “We’ve managed to achieve this because we have a vast educational network that prepares workers for good-paying jobs, a stable economy and a thriving manufacturing sector with plenty of entry-level opportunities that promise upward mobility. With the manufacturing boot camp and certified production technician programs we’re supporting at Hudson Valley Community College and SUNY Schenectady County Community College with funding from KeyBank, as well as CEG’s new Manufacturing Intermediary Apprenticeship Program, we’re looking to help workers increase both their skills and earnings and narrow the income gap.”
He acknowledged, though, that income gap is a persistent issue.
“Despite these and other efforts, there is an income gap that takes a toll on the region, particularly its inner city and rural communities. However, local manufacturers value workers from these areas and direly want to hire them. Sometimes a skills gap stands between the two. Sometimes there are transportation barriers. If we can overcome them, we can thrive as a region, with no exceptions.”
The Economic Policy Institute report does not separate income figures by race and gender.
Co-author Price said the often-cited concern that boosting wages will stunt the economy and cost jobs is probably justified with extreme increases, but not with moderate increases.
“There are limits but we are nowhere near them,” he said.
He also noted that from 1945 to 1973, income for the bottom 99 percent grew more quickly than for the top 1 percent, but the economy still grew at a robust rate.
From 1973 on, income disparity has increased in every state, the report said. In the period the report focuses on, 2009 to 2015, the disparity grew in 43 states, plus the District of Columbia.
By 2015, the report said, the top 1 percent took home 22.03 percent of all U.S. income; the previous reported peak was in 1928, at 23.9 percent.
Some other 2015 statistics cited in the report:
- Average income multiple between top 1 percent and bottom 99 percent, by county: Saratoga 45.4, Albany 26.6, Schenectady 12.8, Montgomery, 12.4, Fulton, 12.0 Schoharie 12.0, Rensselaer 11.6
- Share of all income held by the top 1 percent, by county: Saratoga 31.5, Albany 21.2, Schenectady 11.4, Montgomery 11.1, Fulton, 10.8, Schoharie 10.8, Rensselaer 10.5
- Minimum income required to be part of the top 1 percent in New York state: $550,174, fourth-highest in the nation
- The top 1 percent of New Yorkers captured 31.5 percent of income in the state, highest in the nation and also the largest percentage increase of any state from 1973 to 2015.
- New Yorkers’ share of total national income was 7.51 percent but the share of top 1 percent income was 12.31 percent; neither number was the highest in the nation, but the ratio between the two was highest.