Rich and Poor Pulling Further Apart in Wisconsin

Tuesday, November 20, 2012 at 3:03 PM by

The income disparity between Wisconsin’s richest and poorest families continues to widen, according to a new report by the Center on Wisconsin Strategy (COWS) and the Wisconsin Budget Project. The analysis finds that Wisconsin’s richest residents have experienced dramatic increases in inflation-adjusted income since the mid-1990s, while middle- and lower-income Wisconsinites saw their incomes stagnate or decrease.

 Between 1996 and 2010, the bottom 40% of Wisconsin earners experienced an average decrease of $2,407 in their adjusted gross income, measured in 2012 dollars. The top fifth of income tax filers saw an increase in earnings of more than $17,000 over this period. The top 1% of filers experienced tremendous gains, with incomes that grew an average of $168,773 per tax return, an increase of more than $12,000 per year between 1996 and 2010, as shown in the table below.

Table 1: Income Per Tax Return of the Poorest and Richest Wisconsinites

Change in adjusted gross income, 1996-2010, in 2012 dollars

  Bottom 40% Top 20% Richest 1%
Income in 1996 $16,002 $130,997 $595,497
Income in 2010 $13,595 $148,824 $764,270
Change 1996-2010 -$2,407 $17,286 $168,773
Average change per year -$172 $1,273 $12,055

 

The new analysis follows on the heels of a report last week by Center on Budget and Policy Priorities and the Economic Policy Institute, which found that income inequality has been widening in Wisconsin and across the county since the mid-1970s, though Wiscosnin’s gap remains smaller than all but five other states.

Key findings of the COWS/Wisconsin Budget Project report include:

  • Six of every ten dollars of income in Wisconsin flows to just two of every ten residents – the richest fifth of the population.
  • The 20% of Wisconsinites with the lowest income bring in just three cents of every $100 earned in the state
  • Between 1996 and 2010, adjusting for inflation, the incomes of Wisconsin’s poorest two-fifths of residents decreased by 5%. Middle-income earners saw limited growth, and the richest fifth enjoyed more than a 25% increase in income.
  • The incomes of the top 1% of earners in Wisconsin increased by 43% from 1996 to 2010. 

In the late 1990s and early 2000s, income inequality in Wisconsin stayed relatively stable. But since 2002, inequality has grown every year, as measured by the ratio of total income of the top fifth of Wisconsin earners to the income of the middle fifth of earners. In 2002, the total income of the top fifth was 4.2 times that of the middle fifth of Wisconsin earners.  By 2010, the top fifth of earners brought in nearly five times (4.9) what the state’s middle earners made, as shown in the chart below.

 

The divide between low-income and wealthy families is growing, but there are things Wisconsin can do to put us on a better course. For example, Wisconsin should raise the minimum wage and adjust it annually for inflation, use the federal health care reform law to improve access to affordable health insurance, and help workers match their skills to today’s jobs.

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