Here's where the 99 percent are faring the best in the U.S.

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Unequal states
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Economic Policy Institute

Since the Great Recession, reports of rising income inequality in the U.S. have pretty much followed the same basic storyline: The rich are getting richer. The poor are getting poorer. So on, so forth.

It's easy to associate the economic downturn with the 1 percent’s seemingly meteoric rise in wealth leading up to the recession, but it was hardly an overnight occurrence. The rich have been on an unprecedented tear for decades, as illustrated in a new analysis of IRS income data by the new report by the Economic Policy Institute, a left-leaning think tank. Indeed, the widening income disparity has become so acute that President Obama called it the “defining challenge of our time’ in his recent state of the union address.

Since 1979, the average income of the bottom 99 percent of U.S. taxpayers grew by 19%, while the average income of the top 1 percent grew more than 10 times as much—by 200.5%.

Meanwhile, a combination of stunted wage growth, declines in blue-collar jobs, rising fixed costs like housing and health care, and a growing dependence on debt created something of a perfect storm for middle- and low-income households, driving the wedge between the haves and the have-nots deeper with each passing year.

The EPI report, which uses the latest available data from the IRS, factors in income growth through the year 2011 -- enough to show that even after the economy began to recover, the 99 percent were still losing ground. Their income fell by 0.7% between 2009 and 2011, while the rich saw their income climb 11.5%.

“Obviously, we’ve known for more than a decade about these trends in rising top incomes nationally, but I think what’s clear from looking at this report is that you see pattern in every state,” Mark Price, an economist and co-author of the report, said. “What is affecting us as a nation is affecting all of us.”

Not all states divided equally

When you dig deeper, it’s easy to see that income inequality is hardly a one-size-fits-all problem at the state and even city level. The wealth gap in New York and Connecticut has reached Grand Canyon-size proportions (the wealthiest earn 40 times as much as the 99 percent in both states). But in a handful of states, the bottom earners are actually faring better than the super-rich — at least in terms of income growth.

In Montana, New Mexico, Hawaii, Louisiana and Alaska, the 99 percent’s income actually rose in the years following the recession, while the 1 percent’s declined. It’s no coincidence that income gaps are smaller in states that aren’t exactly known for their booming business sectors.

“Take New York state, which is the most unequal in terms of the gap between the 1 percent and the 99 percent, and that’s largely driven by the financial sector,” said Price. “Part of what’s driving differences you see across states is the size of the financial sector and, of course, the relative concentration of top executives across the board.”

The EPI’s findings were echoed in a report published Thursday by the Brookings Institute, which was based on the Census Bureau’s American Community Survey. It takes an even more localized look at income inequality, pinpointing cities in which income gaps are larger than others.

Brookings found large cities, for example, generally have higher income inequality compared to the rest of the country, while smaller cities tend to fare better in terms of wealth parity. In the 50 largest metro areas, the rich earn nearly 11 times as much as low-income households, while the national average is 9 times as much.

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Source: Brookings

In cities like Atlanta, San Francisco, and Miami, the richest households earn 15 times as much as their less-well-off counterparts. But hop over to smaller cities, with fewer big business hubs and more blue-collar jobs, and you’ll find households on more equal footing.

A rich family in Arlington, Texas, earned just 7 times as much as a poor family in 2012. Virginia Beach, Va., had the lowest income gap of all, Brookings found, with the wealthiest households earning just 6 times as much as the poorest. 

Does that mean the grass is always greener where the income gap is smallest? Not exactly. States in the Midwest posted some of the biggest gains in 99 percent wealth in the years following the recession, but if you look just under the surface, you’ll find economies just as susceptible to failure as any other.

“There’s no question that that growth was driven most importantly by energy development, unemployment rates have been low and that’s helped boost incomes,” Price said. “But there’s great risk in a place like South or North Dakota. Once that energy boom goes away, all of that prosperity will go with it. Good times are followed by a bust.”

Based on the EPI report, here’s a look at the states where the 99 percent are faring best in the income wars:

10. Iowa

Income growth 2009-2011
Top 1 percent: 9.6%
Bottom 99 percent: 3.8%

Avg. income of the 1 percent: $659,386
Avg. income of the 99 percent: $48,249

9.  Minnesota

Income growth 2009-2011
Top 1 percent: 12.5%
Bottom 99 percent: 3.8%

Avg. income of the 1 percent: $947,312
Avg. income of the 99 percent:$48,682

8. Montana

Income growth 2009-2011
Top 1 percent: -6.9%
Bottom 99 percent: 4.1%

Avg. income of the 1 percent: $672,899
Avg. income of the 99 percent: $37,740

7. Nebraska

Income growth 2009-2011
Top 1 percent: 9.5%
Bottom 99 percent: 4.7%

Avg. income of the 1 percent: $803,826
Avg. income of the 99 percent: $51,745

6. Hawaii

Income growth 2009-2011
Top 1 percent: -12.3%
Bottom 99 percent: 4.9%

Avg. income of the 1 percent: $635,052
Avg. income of the 99 percent: $52,294

5. Wyoming

Income growth 2009-2011
Top 1 percent: 13.6%
Bottom 99 percent: 5.2%

Avg. income of the 1 percent: $1.47 million
Avg. income of the 99 percent: $53,403

4. Washington, D.C.

Income growth 2009-2011
Top 1 percent:  -1.3%
Bottom 99 percent: 5.2%

Avg. income of the 1 percent: $1.46 million
Avg. income of the 99 percent: $63,282

3. Oklahoma

Income growth 2009-2011
Top 1 percent: 13.8%
Bottom 99 percent: 6.5%

Avg. income of the 1 percent: $883,082
Avg. income of the 99 percent: $42,334

2. South Dakota

Income growth 2009-2011
Top 1 percent: 9%
Bottom 99 percent: 8.4%

Avg. income of the 1 percent: $935,048
Avg. income of the 99 percent: $49,711

1. North Dakota

Income growth 2009-2011
Top 1 percent: 41.3%
Bottom 99 percent: 10.2%

Avg. income of the 1 percent: $1.04 million
Avg. income of the 99 percent: $42,694

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