Quick Hit Ellyn Fortino Wednesday January 28th, 2015, 5:43pm

Study: Top 1% Of Earners In Illinois Captured 97% Of Post-Recession Income Gains

The top 1 percent in Illinois took home nearly all of the state's income gains in the first few years of the U.S. economy's recovery from the Great Recession.

That's one of the findings of a new study on income inequality published by the Economic Policy Institute, a nonpartisan think tank based in Washington, D.C. The report was co-authored by Estelle Sommeiller, a socioeconomist at the Institute for Research in Economic and Social Sciences in France, and Mark Price, an economist at the Keystone Research Center in Harrisburg, Pennsylvania.

Overall, the study showed that the wealthiest 1 percent of taxpayers in 39 states, including Illinois, captured at least half of all the post-recession income gains in their respective states between 2009 to 2012. Over this time period, 17 states saw their top 1 percent of earners gain 100 percent of the income growth, according to the researchers, who examined state-level tax data from the Internal Revenue Service.

Average incomes grew faster from 2009 to 2012 for those in the top 1 percent than the bottom 99 percent in every state but West Virginia, the report reads. And in 2012, the wealthiest 1 percent of Americans earned almost 30 times the income of those in the bottom 99 percent.

Only nine states -- Alaska, Hawaii, Indiana, Kentucky, Mississippi, Montana, New Mexico, North Dakota and Vermont -- saw average incomes grow over the 2009 to 2012 period for both the top 1 percent and the bottom 99 percent, with the top 1 percent taking in less than half of all income gains, the study shows.

"Every state and every region in the United States is going to have to grapple with the effects of rising inequality," Sommeiller said in a statement. "Our study paints a picture of the top 1 percent in each state. While there are differences from the 1 percent nationally, no state has escaped the troubling growth of inequality."

At the national level, average incomes grew by 36.8 percent for the top 1 percent in the U.S. from 2009 to 2012, while they fell .4 percent for the bottom 99 percent.

"In sum, only the top 1 percent gained as the economy recovered," the report reads.

Researchers also looked at long-term trends. Between 1979 to 2007, for example, average income in the U.S. grew overall by nearly 37 percent, and the top 1 percent took home about 54 percent of that growth. Average incomes increased twofold for the top 1 percent from 1979 to 2007, but only by about 19 percent for the bottom 99 percent.

"The benefits of economic growth over [economic] expansions have been flowing increasingly to this tiny fraction of households across most of the states," Price said on a conference call with reporters. "This current expansion from 2009 to 2012 is sort of the perfect storm in the sense that you have a low minimum wage relative to what it was in 1979, you have union density much lower, and you also have this very deep recession and a very slow recovery. And I think all of those things have combined to really hold down income growth for most workers in the economy."

In Illinois, total income grew almost 35 percent on average from 1979 to 2007, with the top 1 percent taking nearly 65 percent of those gains, according to the report.

From 2009 to 2012, average income in Illinois climed by a total of 6.5 percent, with slightly more than 97 percent of those income gains going to the top 1 percent. During this time frame, average incomes in Illinois grew by more than 34 percent among the top 1 percent and just .2 percent among the bottom 99 percent.

Similar to the country as a whole, the wealthiest 1 percent of Illinoisans earned nearly 30 times the income of the bottom 99 percent in 2012, the report showed. Illinois ranked eighth in the nation for the largest income gap between the top 1 percent and bottom 99 percent, whose respective average incomes were nearly $1.4 million and $46,000 in 2012.

Connecticut and New York had the biggest 2012 income gaps, with the top 1 percent in both states earning average incomes more than 48 times those of the bottom 99 percent. Price said the concentration of the financial sector in the Northeast is a main driver of this income disparity.

However, "One of the key findings that comes out of this is: it doesn't matter if you're talking about Alabama or New York state or Connecticut," Price stressed. "The pattern is the same across all the states, and that is that there's an increasing amount of income flowing up. It's of course worse in some places than others, and one of the things we have to explore."

Price said the income inequality trends are "troubling" because they show that "the great machine that is our economy seems to not be generating a lot of growth for everybody else."

"It tends to be concentrated at the top, and we're worried a lot about what that will do (to) people's expectations about what the economy can do for them when they do what we expect of them," he noted.

Policymakers and state officials, Price added, "need to realize that inequality is a problem everywhere."

"If states are not passing progressive taxes and raising revenue from top earners, they are missing out on a large and growing source of income," he stressed.


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