Income inequality made big headlines recently, after the U.S. Census Bureau released new data showing that the gap between the richest and poorest Americans is at its highest level in at least half a century.
Less reported was the significant variation among the states. New York and California had the highest inequality in 2018, while Utah and Alaska had the lowest. In addition, states as diverse as Alabama, Texas and New Hampshire experienced large increases from the prior year.
Why are some states more or less equal than others?
It usually comes down to policies. States with more generous welfare programs and higher minimum wages often have lower inequality, while those with weaker unions and lower taxes on the rich have higher levels.
My research suggests there’s another, less-noticed reason behind the disparities: corporate welfare.
States offer economic development incentives to businesses in order to encourage their investment and expansion in the state.