As financial research firm WalletHub points out in its recent report “2014’s Richest and Poorest States”, the 2008 financial crisis has precipitated the greatest “wealth grab” in history. The new laws protecting the “too big to fail” financial institutions have given the rich nearly free rein to exploit a broken financial system. Oxfam International reported that “the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009.” Moreover, during the same five years, overall income levels decreased significantly for the bottom 90%.
Wallethub decided to undertake an analysis to see where all that money is ending up, and their 2014 Richest and Poorest States ranking is the result.
The methodology for the WalletHub study involved examining data from all 50 states and the District of Columbia across three key metrics: “income,” “GDP per capita” and “tax dollars per capita.” They used a double weight on the income metric given it represents a composite metric including various income brackets, and is more directly related to individual/family financial status than GDP and taxes paid toward the federal government.
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Rapid growth in number of U.S. millionaires
The WalletHub report highlighted that the U.S. reported the highest number of millionaire households ever in 2013 at 7.1 million. The U.S. was also the global leader in the number of new households reaching the seven-figure income mark in 2013 at 1.1 million. WalletHub’s Richie Bernardo notes that if private wealth continues to increase at an annual rate of 3.3% in North America, it will top $59 trillion by the end of 2018.
The District of Columbia and New Jersey were tied for first place in the 2014 richest state rankings. DC was 6th in income and first in GDP and taxes paid per capita. New Jersey was 3rd in income, 9th in GDP and 5th in taxes paid. Connecticut and Maryland were tied for third place on WalletHub’s richest and poorest states list. Connecticut was 5th in income, 5th in GDP and 4th in taxes paid. Maryland was 1st in income, 11th in GDP and 14th in taxes paid.
According to WalletHub’s rankings, Mississippi was hands down the poorest state in 2014. The Magnolia State came in a rock-bottom 51st in all categories. West Virginia was the second poorest state at 50th on the list. The Mountain State was ranked 49th in income, 48th in GDP and 50th in taxes paid. Alabama was ranked 49th on the list; 48th in come, 47th in GDP and 47th in taxes paid.