New Mexico faces the biggest gap between poor and rich households of any state in the nation, according to a study released today by two Washington, D.C., think tanks.
The richest fifth of households in New Mexico earn nearly 10 times more on average than the poorest fifth, according to the report by the Center on Budget and Policy Priorities and the Economic Policy Institute. The wealthiest 20 percent earn an average of $161,162 a year, while the poorest 20 percent in New Mexico earn an average of $16,319. The top 5 percent earn an average of $273,494, according to the study.
“New Mexico’s gap between the richest households and the poorest was already larger than all but four states three decades ago,” said Elizabeth McNichol, senior fellow at the Center on Budget and Policy Priorities in a conference call Wednesday. “The uneven growth in the state since then has widened the gap even further.”
Nationally, the richest fifth of households earned an average income of $164,494, or about eight times more than the bottom fifth of households, with an average income of $20,510.
The gap between rich and poor has widened in all 50 states since the late 1970s, according to McNichol.
The study was based on inflation-adjusted census data from four periods: the late 1970s, the late 1990s and the mid-and late 2000s. It does not include income from capital gains.
After New Mexico, states with the next largest income inequality are: Arizona, California, Georgia, New York, Louisiana, Texas, Massachusetts, Illinois and Mississippi. For eight of those 10 states, the high inequality was driven by lower-than-average incomes among the poorest households, according to the report.
Gerry Bradley, research director for New Mexico Voices for Children, said there are some very high wage employers in New Mexico, including the national labs, that pay at the top of the wage scale. But there are also jobs, many in the tourism industry, that pay at or near the minimum wage.
“We have excellent jobs, good jobs, bad jobs and no jobs,” Bradley said. “No jobs are really contributing to the problem of inequality in New Mexico.”
The rich, in New Mexico, are getting richer, while the poor are barely inching up in income.
Since the late 1970s, incomes of the poorest households in New Mexico grew by about $2,000, McNichol said, while those of the wealthiest climbed by an average $68,000.
New Mexico also has the biggest gap between middle and top earners. The middle fifth of New Mexico households earned $51,136, or about three times less than the top fifth, according to the report.
The report mentions several ways state policy makers could reduce inequality, including raising the minimum wage, strengthening unemployment insurance, making state taxes more equal across all income groups, making it easier to join unions and improving safety net programs such as Medicaid under the Affordable Care Act.
“Unequal growth is a problem for people of all ends of the income scale,” said McNichol. “If poor families and poor children don’t get the skills they need to move into the jobs of the future, that’s going to affect overall economic growth, which will affect people at all ends of the income scale.”
— This article appeared on page C1 of the Albuquerque Journal