Wisconsin residents now have to earn more than $460,000 per year to be among the top 1% of earners in the state, according to a recent UW-Madison report.
The Division of Extension report was written by Prof. Steven Deller in the university’s Department of Agricultural and Applied Economics. It shows the income needed to be among the top 1% of earners has increased fivefold over the past century or so, as more of the state’s total income is going to the earners in this category.
Using data collected at Sam Houston State University, he found the income needed to reach the top 1% of earnings in Wisconsin increased from $77,339 in 1917 to $462,926 in 2020 for an increase of just under 500%. Those dollar figures are adjusted for inflation.
At the national level, the threshold increased from $110,892 to $541,277 over the same period — an increase of less than 400%.
“Over the last several decades, a common frustration with the U.S. economy is that much of the benefit of economic growth flows to individuals at the highest income levels,” Deller wrote in the report. “While evidence of rising income inequality across the U.S. and Wisconsin is solid, there remains a lack of understanding about how changing income thresholds determine high incomes.”
The report also shows the share of Wisconsin income going to the top 1% of earners rose from 14.2% in 1917 to 17.2% in 2020. For the U.S. overall, that share went from 17.7% to 23.6%.
Two reasons exist for this increase over the decades, Deller wrote. As the economy grows, overall income increases and the thresholds for “high income” rise as well, he noted. And a growing share of total income is going to that upper echelon over time.
“Whether the highest income households (IRS tax filers) are disproportionately benefiting from economic growth is subject to interpretation,” he wrote. “The trend of increasing income thresholds and a larger share of income flowing to the top one percent underscores the ongoing concerns about income inequality.”
See the report.
