My favorite Axiom as a real estate economist is the TINSTAANREM statement, which is am an acronym for There Is No Such Thing As A National Real Estate Market or a National Economy. The same is true regarding income. Median income per capita or household, for the country, by state or Metropolitan Statistical Area, varies significantly from location to location and from person to person. Since people have differing skill sets and productive capabilities, some people earn more than others and some earn less. Just as the cost of living varies across locales, likewise do earnings.
Depending on where one lives, the demand and corresponding supply of that same skill set may vary resulting in greater or lesser wages for the same job. To be included in the top 1 percent of all earners nationwide required a minimum income of $421,347 in 2018. This varies, however, across the economic and geographic landscapes.
Where are earnings the greatest and the least? To find out what it takes to be included in the top 1 percent of all earners, 24/7 Wall Street reviewed the Internal Revenue Service’s Statistics of Income by state. They examined income by tax unit, individual filers, or married couples filing jointly. From the data the 50th and 99th percentiles were estimated (median income and top 1 percent. The following table shows, by state:
- Minimum earnings for inclusion in the top 1 percent
- Average earnings of the top 1 percent
- Median income by state based the groups of tax filers
New Mexico had the lowest hurdle to clear to be included in the top 1 percent of all earners at $256,168. The greatest is Connecticut with a needed $663,009 to be included in the top 1 percent (2.6 times that of New Mexico). The average earnings of top 1 percent earner in New Mexico was $643,395 per year compared to $2,178,625 in Connecticut (3.4 times greater). The Missouri Economic Research and Information Center (MERIC) estimates that Connecticut’s cost of living is 38.8 percent greater than New Mexico when using their Composite Cost of Living Index.
The following is a correlation table across the four variables.
To read the entire article from USA Today click https://www.usatoday.com/story/money/2019/06/03/how-much-you-need-to-make-to-be-in-the-1-in-every-state/39529571/
To view the Composite Cost of Living Index for all 50 states for 2018 click https://www.missourieconomy.org/indicators/cost_of_living/
While Colorado has the greatest percentage of people with a college degree (1 in 4 or 24.8 percent), it ranks 8th largest in minimum income to be included in the top 1 percent and 11th in average income among the top 1 percent. A college degree does not guaranty top earnings.