Income inequality in the United States is at record levels. The rich are getting richer, while the middle class struggles to keep pace.
But inequality between the states is actually flattening. Economic growth has risen faster in poorer states than in wealthier states over the last 60 years, statistics show — thanks in large part to government transfer programs like Social Security, Medicare and public assistance.
Those transfers have had a significant effect in reducing income disparities between states and regions, according to a study conducted by two economists and released by the Center for Health Policy Research at the George Washington University’s Milken Institute School of Public Health. And though Republicans from Southern states have led the charge against government spending, that spending has helped their citizens bulk up their personal incomes.
The researchers, Vic Miller and Leighton Ku, found Southeastern states receiving the most government aid, while Rocky Mountain states tend to receive the least. Government transfers contribute the lowest share of personal income in the District of Columbia, at just 11.7 percent in 2012, and the highest percentage in West Virginia and Mississippi. In those two states, federal programs contribute 26.2 percent and 24 percent to personal incomes, respectively.
Mississippi, though, has a ways to go. In 1952, the average resident made just 51.5 percent of the national average income; today, the per capita income in Mississippi is 77 percent of the national average, still the lowest in the nation.
Here’s how state median incomes have fared every 10 years since 1952, as a percentage of the U.S. median income, according to data Miller and Ku crunched from the Bureau of Economic Analysis (we highlighted the best- and worst-performing state in each case):
And here’s the change between 1952 and 2012:
Per capita income grew fastest in Southeastern states between 1952 and 1982, when income increased by nearly 22 percent, closing the gap with wealthier regions of the country. From 1982 to today, New England states had the fastest relative growth.
Growth in specific states can be tied to individual circumstance. North Dakota languished near the bottom of the pack for decades, before an energy boom rocketed incomes toward the top. Today, the median salary in North Dakota is 125 percent of the national average. Similarly, growth of the federal government has led to much higher salaries in Virginia. In 1952, the median salary in Virginia was 85 percent of the national average; by 2012, it was 110 percent of the median.
Utah has gone the opposite way. In 1952, the median income was 91 percent of the national average. Today, it’s 81 percent. The decline, the authors point out, coincides with the explosion of Utah’s younger population; they simply have more residents who are too young to be in the workforce, driving down median salaries.
Michigan’s median salary has fallen from 113 percent of the national average in 1952, when the auto industry provided good jobs and pensions at high wages, to 88 percent today, as the industry struggles to recover from the recession by restructuring labor deals.