Pulling Apart:
A State-by-State Analysis of Income Trends

ALABAMA

Inequality has increased in Alabama over the past two decades. This can be observed by ranking all Alabama families with children according to their income level, dividing them into five groups (or fifths) of equal size, and calculating the average income of each fifth of families. This analysis shows by the mid-1990s:

• The richest 20 percent of families with children had average incomes over 13 times as large as the poorest 20 percent of families.

• The richest 20 percent of families with children had average incomes 2.6 times as large as the middle 20 percent of families.

The Long-Term Trend

Since the late 1970s, income inequality increased in Alabama. The long-term economic growth of the past two decades was shared not evenly among the poor, the rich, and the middle class. Instead, the top fifth of families with children fared substantially better than other income groups.

• The average income of the poorest fifth of families fell by $860 between the late 1970s and the mid-1990s, from $8,390 to $7,530.⁽¹⁾

• The average income of the middle fifth of families increased by only $3,590 between the late 1970s and the mid-1990s, from $34,210 to $37,800.

• The average income of the richest fifth of families increased by $21,600, between the late 1970s and the mid-1990s, from $77,460 to $99,060.

The Recent Trend

Over the past decade, income inequality has moderated somewhat in Alabama. While the average incomes of most families with children increased since the mid-1980s, the average income of the richest fifth of families has increased faster than the incomes of middle class families.

• The average income of the poorest fifth of families increased by about $2,060, between the mid-1980s and the mid-1990s, from $5,470 to $7,530.

• The average income of the middle fifth of families increased by nearly $6,570 between the mid-1980s and the mid-1990s, from $31,230 to $37,800.

• The average income of the richest fifth of families increased by $21,430, between the mid-1980s and the mid-1990s, from $77,630 to $99,060.

End Notes

1. The direction of this change was not statistically significant at the 95 percent level of confidence.

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