Study: Income Inequality Greater, Growing Faster in Blue States

By Barbara Hollingsworth | March 12, 2014 | 12:15pm EDT

(AP graphic)

(CNSNews.com) –  President Obama has said that reducing the growing gap between high and low income earners is one of his top domestic priorities. But a new study finds that residents of states that voted for Obama in 2012 “are experiencing more income inequality than people in other states.”

“Income inequality is worse in blue states, and has also grown more quickly in those areas over the past 10 years,” according to the study, entitled “Blue states have the income-inequality blues,” by Richard Barrington, senior financial analyst at MoneyRates.com.

CNSNews.com previously reported that a Brookings Institute study found that the highest levels of income inequality in the nation were in large cities that overwhelmingly voted for President Obama’s reelection in 2012.

States that voted for Obama also tend to have higher levels of income inequality, according to Barrington, who looked at 10 years of data from the Bureau of Labor Statistics and compared wages between the top and bottom 25th percentiles in all 50 states and the District of Columbia

Using this metric, he found that Washington, D.C. has the highest gap between high and low earners, followed by California, New York, New Jersey, Michigan, Illinois, Texas, Louisiana, Maryland and Virginia.

In 2012, Obama won eight of the ten, with the exception of Texas and Louisiana. South Dakota, which Mitt Romney carried by an 18 percent margin, has the lowest level of income disparity in the nation, the study also found.

“The gap widened the most in Maryland, where it grew by 12.05 percent, compared to an average of 6.43 nationwide,” Barrington noted. The gap narrowed in only two states: Wyoming, where it closed by 3.11 percent, and Louisiana, where income inequality decreased 1.24 percent.

“In blue states, the average ratio between high and low incomes is 2.27, compared to 2.18 in red states. What is more striking is the difference in how rapidly the income gap has grown over the last 10 years. In blue states, the ratio between high and low incomes has grown by 7.74 percent, compared to 4.96 percent in red states,” Barrington noted.

He also pointed out that while the average worker actually tends to be better off financially in states with higher income gaps, “this advantage may be fading.”

“Median incomes have grown more slowly in states where the income gap has been increasing most quickly,” he added.

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