Income inequality has become an increasingly important issue for many Americans. It is no secret that both wealth and income in the United States are much more lopsided toward the highest earners than in other major developed economies. While methods of measuring income inequality vary, it is clear that the highest earners in the United States hold a disproportionate amount of the nation’s wealth and income.
The implications of income inequality – and potential political responses to it – represent their own enormous issue that are beyond the scope this article, but the underlying statistics and trends about income inequality can still offer insight into why and how it occurs. Important economic context for Idaho can also be gained by comparing Idaho’s inequality to other states.
Idaho’s major economic drivers include government, construction, computer chip manufacturing, the food products cluster and unearned income from Idaho households.
In 2012, 146,000 jobs or 23.5 percent of all Idaho jobs were generated by unearned income – money the state’s households received from outside sources in pensions, Social Security, returns on investments, food stamps, welfare payments, unemployment benefits and other so-called transfer payments.
Government was the next strongest economic force, supporting nearly 16 percent of all employment both regionally and statewide.
Only a small fraction of those jobs were attributable to people commuting to work outside of Idaho.
These findings are based on an analysis using economic base theory, which determines whether economic activity generates revenue from outside the local economy or merely recirculates existing revenue.