Cool article in The Atlantic Cities on the growth of American income inequality from 1979 to 2012; essentially, in 1979, there were 11 states (and D.C.) that had rates of inequality (as measured by Gini) that exceeded the rate for the U.S. as a whole. Most of these states were in the South, where poverty was higher (hence, a more drastic representation of inequality). By 2012, the picture is obviously much more intense: 26 states + D.C. saw their inequality rate rise faster than the national average, and 46 of the 50 states saw their rate rise by 10 percent or more. Only four states, then, had a rate of inequality that rose at less than 10 percent — and two of those are outlier states (Hawaii, Alaska), meaning the only mainland states with a semi-in-control rate of inequality increase from immediately pre-Reagan to the end of Obama’s first term were South Dakota and Arkansas.
On the South Dakota front, the actual numbers involved aren’t particularly rosy:
The gap is narrowest in South Dakota, where high incomes are 1.89 times low incomes. There, high-income workers earn $41,580, compared to $21,580 for low-income workers.
The U.S. poverty level for a family of four is $23,850, just for context.
The broader trend line here is that blue states (Democrat) tend to have more (or higher) inequality than red states (Republican), which is interesting because President Obama has called income inequality “a defining issue of our time.” Here’s one theoretical takeaway you can use as an explainer:
Richard Barrington, the researcher who published the report, explained on MoneyRates.com that the research points to two findings: Democrats are more sensitive to income inequality because it is more prevalent in states that elect them, and economic inequality is not necessarily a bad thing for the state’s economy. Barrington explains that, since “people in states who supported Obama are experiencing more income inequality than people in other states,” and those people also tend to vote Democrat, the Democratic Party has an incentive to vocalize concerns that Republican constituents deal with less often.
All this said, you can still find data around Arkansas having a 19.8 percent poverty rate — meaning 1 of 5 people is in poverty — as well as a 29 percent child poverty rate (3 of 10). Just because their inequality hasn’t risen at a 10 percent or higher clip over the last three decades doesn’t necessarily correspond to total economic health. There’s a whole paper written about spatial distribution of income inequality in Arkansas, and it comes back to the same central tenets of most research: build areas into economic centers via job growth and you have the potential to reduce inequality. A lot of this comes back through education, which was the broader takeaway of The Atlantic Cities article too:
The most effective strategy for reducing inequality would thus seem to lie in improving educational and economic opportunities and increasing the wages of those at the very bottom of the economic order. It will take a new social compact to upgrade the 60 million-plus low-skill, low-pay service jobs and add a social safety net. But it is necessary if we want to help create a new middle class and stop the runaway inequality that this entire country and each and every one of the 50 states now face.
This leads you down a deeper rabbit hole as regards the declining role of unions in America — since the conventional logic holds that unions help wages rise for lower-level jobs — and I won’t get deeply into that (I just had to write a sub-par paper about it). If you want to know more about the union aspect of this argument, check out this article from American Prospect.
There are broadly different ways to look at inequality and whether it’s a good or a bad thing — in general, it appears to be a bad thing — and a lot of that will be tied up in your own political leanings. The bigger point is perhaps this: in order to stem the flow of this problem, the twin foci need to be education and higher wages, and the US really isn’t set up as a whole to deeply care about those two issues. You wouldn’t walk into a store called “All Forks, All The Time” and ask to see their futons, would you? That’s almost equivalent to asking the US to “work on fixing inequality.” The people with the decision-making power are the ones who most benefit from the inequality. Why would they stop? And if you’d like to earn a little less but feel closer to those that are earning more, simply move to a red state.