The United States is arguably one of the most economically well-off places on the planet. As of 2019, the U.S. accounts for 29.4% of global wealth, or $105.99 trillion, according to Credit Suisse's 2019 Global Wealth Report. The second largest repository, China, is responsible for 17.7%, or $63.827 trillion. This effectively makes the U.S. the richest country on Earth, in terms of total wealth.
The U.S. also has the most millionaires in the world— 40% of the world's supply, or 18,614,000 adults, according to the 2019 Credit Suisse report. Not surprisingly, the country with the second highest number is China, which accounts for 10%, or 4,447 individuals. Considering this seemingly limitless potential for economic prosperity, it's not surprising that more than a million people immigrate to the U.S. each year.
However, that wealth is not distributed equally across all parts of the United States. Income inequality in the U.S. is considerable. Despite that more than $105 trillion in total wealth, 11.8% of the U.S. population lives in poverty, according to a 2018 census report. Poverty figures today, in the midst of the pandemic, are most certainly higher. Another inequality stamp: The median wealth per adult for the United States for mid-2019 was $65,904. In the highest ranking country—Switzerland—it was $227,891.
Median income is a particularly good way to look at how people are doing, both nation to nation and among states in the U.S. Here's why.
Measuring Wealth: What Median Income Tells Us
There are several ways to assess wealth in a given area. A state's gross domestic product (GDP) offers a glimpse into its overall economic health, but not necessarily how individuals and households are doing. Mean income (the sum total of all values divided by the number of values in a dataset—otherwise know as the average) is the primary mathematical value for making comparisons. But having a large number of either high-earning one-percenters or low-income people in a region can skew the end result in terms of revealing how much money individuals actually earn.
The median gives you a better picture. It is determined by lining up all values in a dataset in numerical order, then finding the "middle" value. A state's median income is exactly halfway between what people earn on both sides of the wealth spectrum. That makes median income a much more accurate assessment of what the average American is making annually than the actual average income.
How Race and Gender Affect Income
Structural racism and sexism severely and negatively impact many Americans and their families. Here, we look at individual income to focus on how individual workers are faring.
A significant contributing factor to American income inequality is a disparity in earnings by race. The differences are stark. In 2018, Asian and White individuals made a median of $87,194 and $70,642 annually, respectively; Latino and Black persons made $51,450 and $41,361, respectively. Additionally, Black and Latino families in 2016 were more than twice as likely to have zero (or negative) net worth. White families were also more likely to own homes (71.9%) than Black (44%) and Latino (45.4%) families in 2016.
A prominent income gap also exists between men and women in the United States. According to the Institute for Women's Policy Research, women made approximately 82% of men's wages in 2017. In terms of median income, in 2018, women made $45,097, compared to $55,291 made by men. Contributing to these discrepancies: Men constituted 37.2% of minimum-wage workers in 2016, while women accounted for just 5.4% of Fortune 500 CEOs.
Race intersects with gender. Asian and White women earn a median of $1,106 and $873 per week, respectively; Black and Latina women earn a median $742 and $678 per week, respectively. And although all women were more likely to live in poverty than White men in 2016, women of color experienced a higher poverty rate than White women.
Median Household Income
One of the measures of income provided by the U.S. Census Bureau—and the one we chose to use for our state-to-state comparison—is median household (HH) income. This is the total gross income of all persons 15 years or older within a housing unit. When the Census Bureau measures and compares how different parts of the nation are doing, "median HH Income is perhaps the single most widely used measure of income in the census," as the Missouri Census Data Center explains. Median household income can include households with only one resident, as well as those with multiple residents who are not related (i.e., roommates).
Median household income is different from two other measures that the census uses:
- Median per capita income, which looks at each individual person's income, rather than treating a household as a singular entity.
- Median family income, which only considers households with two or more people related by birth, marriage, or adoption.
As of 2018, the most recent available figures, the median U.S. annual household income was $61,937.
Richest States by Median Income
The map above shows the pattern of median income, across the U.S. Let's start with a look at the richest states.
Special Consideration: The District of Columbia
- Median Household Income: $85,203 (2018)
- Population: 0.71 million (2019)
- Unemployment Rate: 8.6% (2020)
- Poverty Rate: 16.2% (2018)
The District of Columbia is not a state, of course, but the U.S. Census Bureau includes it among the 50 states when listing median income. Its inclusion makes sense, given the fact that the District's median income is higher than any state. As is likely unsurprising, the federal government is the largest employer in the nation's capital. Additionally, Washington, D.C., is the only location that beats New Jersey in terms of both population density and median house value. Despite its high income and small population, D.C. also has the highest poverty rate of any of the richest states, with nearly a fourth of all children living below the poverty line.
- Median Household Income: $83,242 (2018)
- Population: 6.05 million (2019)
- Unemployment Rate: 8.0% (2020)
- Poverty Rate: 9.0% (2018)
Maryland's private-sector industries were responsible for $331.1 billion in economic output in 2019. The Free State also has the largest number of federal jobs per capita, which makes sense, given its adjacency to Washington D.C. Both the Social Security Administration and the Food and Drug Administration are headquartered in Maryland.
2. New Jersey
- Median Household Income: $81,740 (2018)
- Population: 8.88 million (2019)
- Unemployment Rate: 16.6% (2020)
- Poverty Rate: 9.5% (2018)
Not only does New Jersey have the largest population of the three richest (and the three poorest) states; it also has the largest population density of any state in the U.S. Healthcare is the Garden State's largest industry, adding $37 billion to the state economy and employing approximately 478,900 people. New Jersey is also the birthplace of major industries, such as organized baseball, professional basketball, movies, and passenger flights.
- Median Household Income: $80,212 (2018)
- Population: 1.42 million (2019)
- Unemployment Rate: 13.9% (2020)
- Poverty Rate: 8.8% (2018)
Hawaii's greatest income generator is the visitor sector, the industries related to tourism. Unsurprisingly, the negative effect COVID-19 has had on the travel industry has resulted in the archipelago's unemployment rate being the second highest on this list. Hawaii also has the highest median house value of any of the richest and poorest states, even higher than the District of Columbia's.
Poorest States by Median Income
Now, the opposite end of the spectrum. These states have the lowest median incomes.
1. West Virginia
- Median Household Income: $44,097 (2018)
- Population: 1.79 million (2019)
- Unemployment Rate: 10.4% (2020)
- Poverty Rate: 17.8% (2018)
Not only is West Virginia the poorest state by median income, its median household income hasn't increased since 2007 (adjusted for inflation). The Equality State is another case where the federal government is the largest employer, but this time it hasn't pushed enough people out of poverty. Prior to the COVID-19 outbreak, West Virginia's 1938 unemployment rate was the highest in U.S. history.
- Median Household Income: $44,717 (2018)
- Population: 2.98 million (2019)
- Unemployment Rate: 8.7% (2020)
- Poverty Rate: 19.7% (2018)
Despite 35% of Mississippi being dedicated to farmland, the federal government is the biggest employer in the Magnolia State. Even so, agriculture still represents a significant industry in Mississippi, employing 29% of the state's workforce. In addition to having the highest poverty rate of any state in the country, Mississippi is also known as the "hungriest state" in the U.S., with 20% of its population being food insecure.
- Median Household Income: $47,062 (2018)
- Population: 3.02 million (2019)
- Unemployment Rate: 12.4% (2020)
- Poverty Rate: 17.2% (2018)
Agriculture makes up the Natural State's largest industry, with farmland comprising 41% of its territory. Forests comprise another 57%, 25% of which belongs to the forestry industry. Despite the low income and high poverty rate, several major companies are headquartered in Arkansas, including Tyson Foods and Walmart.