Morton J. Marcus is an economist formerly with the Kelley School of Business, Indiana University. His column appears in Indiana newspapers.
Data from the American Community Survey by the U.S. Bureau of the Census indicate that 5.5 million households or 4.8 percent of all American households have income and employer-paid benefits of $200,000 or more per year. You might call these the Top 5% households, just as we hear so often about the Top 1% who are included in, but are way above this level.
Now $200,000 in income (including benefits like a share of health insurance) is awfully good, if not so amazing these days. Many two-worker families can achieve this level and, apparently, nearly one-in-twenty households have.
Yet, where are they? Half of them live in just seven states. California leads the way with 908,000 of these top income households. “Of course,” you might say, “California has more households than any other state, it makes sense they would have the most top income households.”
Yes, California has 10.9 percent of all households, yet accounts for 16.5 percent of the top income households. The other six states comprising the top half of these fortunate households are New York, Texas, New Jersey, Florida, Illinois and Virginia. These seven states have 52.5 percent of the top income households with only 40.6 percent of all households.
Contrast that with Indiana. We have 2.2 percent of all households, but only 1.2 percent of the top income households. In total, 63,400 of the top income households are in the Hoosier state, fewer than in Tennessee, Missouri and Wisconsin, just above Louisiana.
That small one percent deficit is the fifth worst case in the nation. Only North Carolina, Michigan, Florida, and Ohio have greater deficits.
If you like rankings, Indiana has the seventh lowest concentration of top income households among the 50 states. With just 2.6 percent of all Indiana household in that $200,000+ category, we rank lower than those same four states (NC, MI, FL and OH).
At only 2.6 percent in the top income households, Indiana is tied with South Carolina and Alabama. We are just above Kentucky, Montana, Idaho, Arkansas, Mississippi and West Virginia.
Surprising as it may be to some, New Jersey has the highest percent of its households (9.4 percent) in the $200,000+ group.. The Garden State is followed by Connecticut, Maryland, Massachusetts and Virginia.
These data for the states covered the years 2009 to 2013. A similar report two years earlier showed the Indianapolis metro area, our state’s presumptive leader in sumptuous living, had a concentration of just 4.4 percent high income households. Compare that to 18 percent in Southwestern Connecticut near New York City and 16 percent in Silicon Valley.
What does it mean to have a low concentration of high income households? Just look around your community. Indiana may have wonderful people, but it does not have many households with the income (or education) to support many distinctive restaurants and stores, or even better movie houses.
Our national income disparities are geographic realities which deny all citizens, however modest their income, the opportunities to enjoy a more varied, enriching life.