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Income inequality grows in R.I.


WASHINGTON – Income inequality has grown in the Ocean State in recent decades and the incomes of the state’s richest residents “dwarf” those of its poorest, according to a report from the Economic Policy Institute and the Center on Budget and Policy Priorities.

Using an analysis of U.S. Census Bureau data, the report - Pulling Apart: A State-By-State Analysis of Income Trends - found that income inequality in Rhode Island has increased steadily since the 1970s. During that period, the income of the state’s poorest increased 11.8 percent while the income of the state’s richest individuals grew 99 percent.

“After decades of widening inequality, Rhode Island’s richest households have dramatically bigger incomes than its poorest,” said the report.

In Rhode Island, the richest 20 percent of households have average incomes 7.5 times as large as the bottom 20 percent of households and 2.5 times as large as the middle 20 percent of households. The average annual income is $22,500 for the state’s poorest 20 percent, $67,200 for the state’s middle 20 percent and $167,950 for the state’s richest 5 percent.

The report went on to call the period from the mid-1990s to the mid-2000s a “lost decade” for Rhode Island’s low- and middle-income families. During that period, the poorest 20 percent of state residents saw a 3.2 percent drop in average annual incomes, the middle 20 percent of state residents saw a 6.2 percent increase and the richest 20 percent saw their incomes grow 11.1 percent.

On a national level, income inequality results were similar to those seen in Rhode Island, and most states saw the rich pulling away from low- and middle-income households, according to the report.

“A state-by-state examination finds that income inequality has grown in most parts of the country since the late 1970s. Over the past three business cycles prior to 2007, the incomes of the country’s highest-income households climbed substantially, while middle– and lower-income households saw only modest increases,” said the Economic Policy Institute release announcing the report.

During the recession, households at all income levels saw declines in income due to widespread job loss and a loss of realized capital gains. But as the incomes of the country’s richest households have begun to rebound, “the incomes of those at the bottom and middle continue to stagnate and wide gaps remain between high-income households, and poor and middle-income households in every state,” said the report.

Neighboring Massachusetts is among the states with the highest income inequality, where the ratio of average household income for the richest 20 percent of households to the poorest 20 percent was 8.3 in the late 2000s. Massachusetts fell behind only New Mexico (9.9), Arizona (9.8), California (9.5), Georgia (9.3), New York (9.2), Louisiana (8.8) and Texas (8.6).

As of the late 2000s – the most recent data available – the poorest 20 percent of households in the country had an average income of $20,510, while the top 20 percent had an average income of $164,494 – eight times as much.

The average income of the top 5 percent of households in the country was 13.3 times the average income of the bottom 20 percent in the late 2000s. In Arizona, New Mexico, California, Georgia and New York, that ratio exceed 15.0.

From the late 1990s to the mid-2000s, incomes fell by close to 6 percent among the country’s bottom 20 percent of households, while rising by 8.6 percent among the top fifth. For the middle 20 percent of households, incomes grew by 1.2 percent.

The report went on to contrast current economic times to those from World War II through the mid-1970s, during which the gains of economic growth were more evenly distributed.

“Income inequality has been on the rise for decades in every state,” said the report. “Since the 1970s, rich households’ incomes have grown much faster in every state than have the incomes of poor and middle-income households.”

To view the full report, visit: www.epi.org.


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