Utah’s wealth gap is smallest in the nation

The wealth gap is a hot political issue. It led Democratic presidential candidates Bernie Sanders and Elizabeth Warren to propose tax hikes on the wealthiest Americans to fund programs for the middle class and poor. President Donald Trump attacks that as socialism.

But amid such debate for the second straight year, Utah enjoys the nation’s smallest wealth gap — with relatively few who are ultra-rich or miserably poor, according to U.S. Census Bureau estimates released Thursday.

“We’re homogenous,” said Pam Perlich, senior demographer for the University of Utah’s Kem C. Gardner Policy Institute. “We’re a working-class state.”

But despite the state’s ranking, its uniformity is changing. Utah is one of nine states (as well as the nation overall) where data shows statistically significant change over the past year toward more income inequality.

“Utah is a place of growth, prosperity and possibility. That means more and more, you’ve got some extreme winners — and the people who have been left behind are really left behind,” Perlich said.

These are among the more interesting findings from the release of the annual American Community Survey, with hundreds of categories of social, economic and demographic statistics for 2018. Other key findings include that Utah incomes are up, poverty is down, and the minority population is growing.

More equal than others

Income equality is measured by something called the “GINI Index,” which gives scores between zero and one. A score of one means one household would have all the income. A score of zero indicates perfect equality among households.

Utah’s score for 2018 is 0.427, up from 0.423 a year earlier. In 2017, Utah and Alaska were essentially in a statistical tie for the lowest score — but they have separated a bit with Alaska now scoring 0.432. The margin of error still has them close.

The national average was 0.485. Puerto Rico had the highest inequality score at 0.542.

New estimates show that relatively few Utahns live at the economic extremes compared with other states.

Only 3.9% of Utah households — one of every 25 — earn less than $10,000 a year. At the other extreme, 6.3% of households here earn more than $200,000 a year, about one of every 16.

Between them, Utahns aren’t exactly uniform — and spread out widely in different income ranges.

Roughly a quarter of Utah households earn between $25,000 and $49,999; a fifth receive $50,000 to $74,999; a sixth earn between $75,00 and $99,999; a fifth earn between $100,000 and $149,999; and an eighth earn between $150,000 and $199,999.

Why Utah is homogenous

Economists list several reasons why income inequality is relatively low in Utah

“One reason is that we don’t have a lot of corporate headquarters, so we don’t really have many of the really high earners,” said Lecia Langston, senior economist for the Utah Department of Workforce Services. “We also have a low poverty rate, so we don’t have a lot of low earners either. That makes us more toward the middle.”

Perlich says that may be changing a bit — and is why Utah is trending toward a wider wealth gap.

“We now do have the presence of very wealthy people who call [Utah] home,” and data shows that is increasing, Perlich said. And while the state has a low rate of single-parent homes — which helps hold down poverty — she said that number is increasing.

Langston said that another reason for Utah’s low income inequality “is the preponderance of young people here.” That again means fewer really high-wage earners — those tend to be in their 50s — and a more homogenous wage range.

Langston adds that Utah’s relatively high education levels also likely play a role.

“We have a very high rate of high school graduation. That means we don’t have a lot of really low earners,” she said. “A high percentage of men also have at least a bachelor’s degree, although not so much with women.”

Langston notes that for years, data showed that Utah trended toward more equality. But that has now changed. Perlich sees several potential causes.

Since the Great Recession, Utah’s tech industry has boomed, “meaning some of those people with very high incomes are locating here,” Perlich said. Meanwhile, “for working-class people in occupations that just required a high school education, their jobs are mostly gone now.”

Also, she said that refugees and other new Americans “are in an even more precarious position than they were 10 years ago and aren’t able to enforce their worker rights or wages, given the tenuous situation around immigration.”

Differences among communities

While Utah may rank overall as relatively homogenous by income, some big differences still exist between different communities.

For example, among Utah’s 11 largest cities (the only ones with data listed in the new census release)‚ those with the smallest wealth gaps among their residents are: West Jordan (with a GINI Index of 0.3474), Lehi (0.3543) and Layton (0.3676). Perlich said housing there tends to attract a homogenous group whose members have similar incomes.

That is different in bigger cities. Salt Lake City had the highest score of 0.5067 — meaning the most income inequality — followed by Provo at 0.4863. “Big cities have a much bigger draw of people,” Perlich said — so Salt Lake City will have some wealthy areas such as the upper avenues, and poorer neighborhoods on the west side with new immigrants.

Some cities with relative income equality within their own borders are quite different than their neighbors.

For example, West Valley City and South Jordan have among the top equality scores and are not too distant geographically. But the median household income in South Jordan is $106,410 compared with just $66,884 in West Valley City.

Other findings

Following are some other findings in new census estimates, with much of the analysis from the Mallory Bateman, a demographer at the Gardner Institute:

Income • Utah’s household income rose to $71,414, up from 69,919 a year earlier. That ranked No. 13 nationally.

Utah usually ranks low on a per capita basis, because it has large families. But on a household basis, it ranks well — in part because it counts more income earners. Langston notes that Utah has among the highest rates nationally of teenagers who work, for example.

Langston notes that income is up because of a booming economy that has increased competition for workers, and raised wages. She says she likes to repeat to companies struggling to find enough workers, “There is no worker shortage, only a wage shortage.”

Poverty • Utah’s poverty rate was 9.0%, down from 9.7% a year earlier. But it varied greatly around the state. The rate was 29.1% in Provo, 16.4% in Salt Lake City and 13.5% in Ogden — but just 2.4% in South Jordan. College students likely are a significant contributor to Provo’s poverty rate.

Minorities • More than one of every five Utahns, 22.2%, identify as Latino or as a member of a minority race. The Latino population grew to 448,877, up from 434,257. About 14.2% of Utah’s population now is Hispanic.

West Valley City’s population is 54.7% minority, and it is the state’s only large “minority-majority” city. Salt Lake City’s population is 33.9% minority.

Utah’s foreign-born population increased at a much slower rate last year amid controversy and tougher federal policy on immigration and refugees. It was up by only 1,983 people in 2018 (to 271,222), compared with an increase of 16,906 a year earlier.

Families • The average family size is now 3.61 (down from 3.63). About 74.5% of Utahns live in a family household, and 25.5% live in nonfamily households. The median age in the state is unchanged at 31 years.

The state is growing a bit older. The share of the population under age 5 dropped from 8.2% to 7.9%, while the share age 65 and older increased from 10.8% to 11.1%.