The income disparity in the United States has long been a hot-button issue, sparking debates and discussions about economic equality and opportunity. A new analysis provides fresh insights into just how wide this gap is, particularly between the average earners and those in the top echelons of income across different states.
A Glimpse into the Financial Elite
According to a detailed report by WalletHub, there is a staggering difference between what it takes to be considered among the top 5% of earners in various states compared to the national average income of $74,600, as reported by the Federal Reserve. In states like New York, which tops the list, an individual needs to make approximately $553,000 annually to be in the top 5%—a figure that dwarfs the earnings of the median U.S. salary earner.
Check out what you need to make in your state:
| Rank | State | Average Annual Income of Top 5% | Median Annual Income | Average Annual Income of Bottom 20% |
|---|---|---|---|---|
| 1 | New York | $553,436 | $91,366 | $13,301 |
| 2 | Connecticut | $518,757 | $114,156 | $14,576 |
| 3 | Virginia | $518,296 | $89,393 | $18,694 |
| 4 | New Jersey | $505,621 | $117,847 | $16,445 |
| 5 | Illinois | $504,800 | $78,304 | $16,192 |
| 6 | Georgia | $487,870 | $66,612 | $16,472 |
| 7 | Texas | $481,483 | $70,513 | $16,802 |
| 8 | Washington | $474,067 | $103,748 | $18,223 |
| 9 | Florida | $470,308 | $68,818 | $15,375 |
| 10 | Massachusetts | $466,208 | $127,760 | $13,689 |
| 11 | Minnesota | $464,981 | $86,364 | $19,797 |
| 12 | Colorado | $456,603 | $97,301 | $18,451 |
| 13 | California | $454,829 | $123,988 | $13,949 |
| 14 | Tennessee | $453,539 | $59,077 | $15,679 |
| 15 | District of Columbia | $450,892 | $162,265 | $9,011 |
| 16 | North Carolina | $450,592 | $63,025 | $15,836 |
| 17 | Utah | $448,195 | $89,786 | $22,491 |
| 18 | Michigan | $446,114 | $62,446 | $17,019 |
| 19 | Missouri | $446,069 | $59,715 | $16,821 |
| 20 | Pennsylvania | $445,261 | $74,711 | $15,801 |
| 21 | Ohio | $436,922 | $61,904 | $16,188 |
| 22 | Maryland | $427,135 | $124,693 | $16,647 |
| 23 | Arizona | $424,913 | $74,375 | $16,604 |
| 24 | Kansas | $423,517 | $68,489 | $17,176 |
| 25 | Nebraska | $416,325 | $72,384 | $17,380 |
| 26 | Arkansas | $416,224 | $51,032 | $14,069 |
| 27 | South Carolina | $412,771 | $62,909 | $13,996 |
| 28 | Kentucky | $411,897 | $55,629 | $13,800 |
| 29 | Oklahoma | $405,113 | $57,215 | $15,205 |
| 30 | Idaho | $403,737 | $70,041 | $18,372 |
| 31 | Delaware | $402,989 | $87,173 | $16,930 |
| 32 | Wisconsin | $402,256 | $72,602 | $17,973 |
| 33 | Nevada | $401,062 | $80,366 | $14,472 |
| 34 | New Hampshire | $400,343 | $110,205 | $18,075 |
| 35 | Indiana | $399,270 | $64,170 | $16,670 |
| 36 | Alabama | $398,584 | $55,480 | $13,242 |
| 37 | Montana | $395,720 | $68,937 | $15,337 |
| 38 | Louisiana | $395,155 | $56,282 | $11,504 |
| 39 | Iowa | $395,093 | $68,974 | $17,621 |
| 40 | South Dakota | $393,809 | $69,266 | $17,252 |
| 41 | North Dakota | $387,548 | $79,874 | $15,661 |
| 42 | Wyoming | $387,280 | $76,307 | $16,199 |
| 43 | Oregon | $377,399 | $91,100 | $14,720 |
| 44 | Mississippi | $377,040 | $46,880 | $12,168 |
| 45 | Rhode Island | $353,721 | $104,252 | $12,668 |
| 46 | New Mexico | $351,972 | $58,911 | $11,944 |
| 47 | West Virginia | $345,239 | $52,719 | $12,477 |
| 48 | Maine | $338,866 | $79,800 | $13,749 |
| 49 | Vermont | $334,470 | $89,695 | $14,477 |
| 50 | Hawaii | $334,369 | $141,832 | $14,014 |
| 51 | Alaska | $321,634 | $113,934 | $15,646 |
(Credit: WalletHub)
The High-Income States
The disparity doesn’t end in New York. In Connecticut and Virginia, the average income for the top 5% stands at about $518,000, closely followed by New Jersey and Illinois, where the top earners make around $505,000 annually. These numbers not only illustrate the vast differences in income within these states but also highlight the challenge faced by average earners trying to bridge this substantial financial gap.
The Other End of the Spectrum
Conversely, the state with the lowest threshold for entering the top 5% is Alaska, where an income of roughly $321,000 is sufficient. Hawaii and Vermont are not far behind, with the top 5% earners making about $334,000 annually. This illustrates that while disparity exists nationwide, the scale and impact vary significantly by region.
Median Income and Economic Disparity
Washington D.C. boasts the highest median income at $162,265 but also features the lowest earnings for the bottom 20%, making only $9,011 annually. This stark contrast within the capital highlights the broader issue of income inequality—a problem that is more pronounced in regions with high median incomes. Other states with high median incomes include Hawaii, Massachusetts, Maryland, and California, each illustrating varying degrees of income disparity.
Bridging the Gap
Reaching the top 5% of earners is no small feat and involves several critical factors. Financial experts suggest that a steady increase in income, whether through career advancement, savvy investing, or both, is crucial. Having a robust investment strategy that yields positive returns and ensuring a diversified portfolio can also play a significant role in climbing the economic ladder.
Prioritizing Financial Stability
Moreover, prioritizing long-term financial stability over immediate gratification is essential for those aiming to break into higher income brackets. This means making informed financial decisions, saving diligently, and planning for the future, rather than succumbing to the lure of short-term pleasures.
Eyeing the Top 1%
For those setting their sights even higher, Forbes reports that reaching the top 1% of U.S. earners requires an annual income of at least $597,815. This goal, while ambitious, underscores the importance of aggressive saving and investment strategies to achieve such a high financial threshold.
Conclusion
Understanding what it takes to be among the top 5% of earners in various U.S. states not only puts the spotlight on the profound income disparities but also offers a blueprint for those aspiring to elevate their economic status. By making smart financial choices, advancing professionally, and investing wisely, individuals can aim to bridge the gap between average income earners and the financial elite. The journey to the top is fraught with challenges, but with the right strategies and a focus on long-term gains, it is indeed a feasible goal.
