By Hank Russell
A recent study that came out showed that New York State has the second-highest income in the nation, behind Virginia. But, when taking a deeper dive into the numbers, it shows that income inequality is very much a problem in the state. Further, the disparity in income between the highest and lowest earners in the state is the larges in the nation.
According to WalletHub, New York had a score of 66.27, compared to 67.57 for Virginia. West Virginia had the lowest score with 11.84. To determine the states where people have the best incomes, WalletHub compared the 50 states and the District of Columbia based on three key metrics measuring income for different segments of the population, adjusted for the cost of living index (COLI).
Citing U.S. Census data, WalletHub analyst Chip Lupo said the top 10% of the nation’s earners make over 12 times more money than the bottom 10% earners.
“By measuring the income of various percentiles against a state’s median income, we can better identify where income disparities are more prevalent, which could help us better understand why residents of certain states struggle more to make ends meet,” Lupo said.
New York State’s median annual income is $96,746, which is far above the national median yearly income of approximately $83,700, according to the latest data from the Federal Reserve. Although that income level sounds pretty high, it is just the 16th-highest in the nation. The District of Columbia led the nation with a median income of $174,287 annually.
Based on data from WalletHub, New York topped all other states and the District of Columbia for the average income of the top 5%, earning $585,523 a year. Alaska had the lowest income among high earners, with an income of $352,276.
However, the Empire State was near the bottom of the list when it came to the bottom 20% of earners. Their median income was $13,633 a year in that bracket, the seventh-lowest in the nation. The District of Columbia had the lowest income with $9,579 a year. Further, New York had the widest discrepancy between the top 5% and the lowest 20% nationwide, with $571,890 separating and high and low earners.
Many experts had varying views on why there is such a discrepancy in incomes nationwide. Dr. Marc Fusaro of Walsh University said one of the reasons is how government money is distributed.
“The federal government collects taxes from across the country, but a lot of that money is spent in and around Washington, D.C.,” Fusaro said. “Some of it goes to people in need, which can reduce inequality. But a large amount goes to high-salary federal employees, contractors, and grantees, which can increase it. So, distribution plays a big role.”
Dr. Sudipta Roy, a professor of finance at the University of St. Francis, attributed income inequality to disparities in wages and property income. “The willingness and ability to invest in human capital has helped create a virtuous cycle of higher income and savings, along with accumulation of physical and financial assets for some, while ingrained inequalities, combined with discrimination and/or lack of access, have constrained others.”
“The truth is that there are many factors that have increased inequality, including greater wage inequality within jobs — highly productive workers earn far more for doing the same job — to unequal access to higher education, which has become a prerequisite in many high-paying fields,” Tyler Schipper, an associate professor at the University of St. Thomas, added. “Put those two trends in the context of a tax code that has become less progressive over time, and you can explain a large amount of the increase in income inequality over the last half century.”