Report: Top 1 percent of Kentuckians captured nearly half of state income growth over past few decades

New report shows widening income inequality in all 50 states

BEREA, Ky. (Feb. 19, 2014) — The top 1 percent of earners in Kentucky took home 48.8 percent of state income growth from 1979 to 2007—a share in line with the national average of 53.9 percent—according to a new report released today by the Economic Policy Institute that documents growing income inequality in all 50 states.

In The Increasingly Unequal States of America: Income Inequality by State, Estelle Sommeiller and Mark Price conduct a state-level analysis of income trends from 1917 to 2011. They show that states reflected the national pattern of extreme growth in income inequality over the last few decades between those at the top and everyone else.

From 1979 to 2007, incomes overall in Kentucky grew 19.9 percent. But incomes of the top 1 percent grew 105.1 percent while the average income of the bottom 99 percent of Kentuckians grew only 11.2 percent.

Since the early 1980s, U.S. inequality has been climbing back toward its peak in 1928, right before the Great Depression. That year, the top 1 percent of Kentuckians had 19.4 percent of all state income. Their share fell to 9.2 percent in 1979, but rose to 15.8 percent in 2007.

After incomes at all levels declined as a result of the Great Recession, lopsided income growth reemerged when the recovery began in 2009, with the top 1 percent capturing an alarming share of economic growth since then. In Kentucky the top 1 percent have netted 48.7 percent of state income growth from the beginning of the recovery in 2009 until 2011, the latest year for which data are available.

The report documents what Kentuckians are experiencing: while the wealthy have done well, the vast majority have not benefited from economic growth and many struggle to make ends meet. Policies like a higher minimum wage would lift the bottom and increase the living standards of many Kentuckians. The state also needs tax reform that recognizes the growing gap in ability to pay taxes between the top and bottom of the income ladder, and that generates revenue for much-needed investments that help create more broadly-shared prosperity.

The earnings of Kentucky’s top 1 percent rank comparatively low among states. But since the earnings of the rest of Kentuckians also rank near the bottom, the pattern of growth in income inequality in Kentucky is similar to national trends. The top 1 percent in Kentucky earned $578,193 on average in 2011, 16.7 times more than the average earnings of the bottom 99 percent, $34,716.

The full report is available here.

The Kentucky Center for Economic Policy is a non-profit, non-partisan initiative that conducts research, analysis and education on important policy issues facing the commonwealth. Launched in 2011, the Center is a project of the Mountain Association for Community Economic Development (MACED). For more information, please visit KCEP’s website at kypolicy.org.