Trickle Down Economics? Red States Have Highest Income Inequality

Trickle Down Economics and Income Disparity

For all their talk of trickle down economics, Republicans in red states are failing to prove that particular model for success. Two new studies from the Economic Innovation Group and the Urban Institute have shown which states and cities are in most economic distress and where the highest levels of economic disparity occur among different demographics.

According to the study, the biggest cases of economic inequality lie in red states, while a majority of distressed cities are located in blue states.

Both studies examined inequality by calculating a “neighborhood advantage score” based on household income, homeownership rates, housing values, and college attainment and then comparing the top 10% of Census tracts to the bottom 10% across the US.

To determine economic distress the groups examined seven variables across 25,000 ZIP codes. Those variables include, educational attainment, housing-vacancy rates, unemployment rates, poverty levels, median-income ratios, percent changes in employment, and percent change in establishments.

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According to researchers, the highest level of inequality was found in Dallas Texas, a city that hasn’t voted for a Democratic president since Jimmy Carter in 1976.

The study found that the top 10 cities with a population of 400,000 or more that have the biggest economic disparity are Dallas, Austin, Fresno, Phoenix, Omaha, Kansas City, Fort Worth, Memphis, Indianapolis and Louisville. Only Fresno is located in a blue state.

The least unequal city in terms of economic differences is Erie, which is in the blue state of Pennsylvania.

On the other hand, six of the top 10 distressed cities are located in blue states (Fresno, Las Vegas, Chicago, Milwaukee, Baltimore and Detroit). The four red states with distressed cities include, Tucson, Memphis, Houston and Atlanta.

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Written by Peter Mondrose

Peter Mondrose

Peter Mondrose is the Editor-In-Chief at BusinessPundit. He received his degree in Economics in 1998 and a second degree in Journalism in 2004. He has served as a financial adviser, market trader, and freelance journalist for the last 11 years. When he's not investigating market conditions and reporting on workplace news, he can be found traveling with his wife, dog, and laptop. He can be reached at