PROVIDENCE – Income inequality in the United States has continued to grow in the years since the Great Recession, though the gap in Rhode Island isn’t as large as it is in neighboring Connecticut and Massachusetts, a new report shows.
The wealthiest one percent of families in the U.S. took home an average of 26.3 times as much income as the bottom 99 percent – up from 2013, when they earned 25.3 times as much, according to the report titled “The New Gilded Age,” released Thursday by the Economic Progress Institute.
Among the 50 states, Rhode Island ranked No. 32 for income inequality, lower than Connecticut, which ranked No. 3, and Massachusetts, which ranked No. 6, according to the institute, a nonprofit think tank in Washington, D.C, that researches and analyzes the economic impact of policies and proposals.
From the standpoint of the health of the overall economy, the growing income gap is a problem, according to the report, as it is a product of policies that have prevented the U.S. from returning to full employment while allowing the wealthiest few to appropriate, “more than their fair share of the nation’s expanding economic pie.”
The income gap is “a persistent problem throughout the country – in big cities and small towns, in all 50 states,” said Estelle Sommeiller, a socio-economist who co-authored the report.
“While the economy continues to recover” from the recession, she said, “policymakers should make it a top priority to grow the incomes of working people while reigning in corporate profits.”
In Rhode Island, the top 1 percent of families had an average income of $928,204 in 2015. That was 18.2 times as much as the bottom 99 percent, which had an average income of $50,963.
In Connecticut, the top 1 percent had an average income of $2,522,806 in 2015. That was 37.2 times as much as the bottom 99 percent, which had an average income of $67,742.
In Massachusetts, the top one percent had an average income of $1,904,805 in 2015. That was 30.9 times as much as the bottom 99 percent, which had an average income of $61,694, the report shows.
Income inequality was largest in New York and Florida, respectively, while it was smallest in Alaska and Hawaii, respectively.
The rise of top incomes relative to the rest of the population is a sharp reversal of a trend that prevailed in the mid-20th Century: From 1928 to 1973, the share of income held by the top one percent declined in every state for which there is data, the report states.
That earlier era was characterized by a rising minimum wage, low levels of unemployment after the 1930s, widespread collective bargaining in private industries, and a cultural, political, and legal environment that kept a lid on executive compensation, the report said.
The income gap is “the result of intentional policy decisions to shift bargaining power away from working people and towards the top one percent,” said economist Mark Price, who also authored the report.
“To reverse this,” he added, “we should enact policies that boost workers’ ability to bargain for higher wages, rein in the salaries of CEOs and the financial sector and implement a progressive tax system.”
Scott Blake is a PBN staff writer. Email him at Blake@pbn.com.