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KNOXVILLE — The gap is widening between rich and poor in Tennessee, mirroring what is happening nationwide.

That trend is the subject of a special supplement to this year’s Economic Report to the Governor of the State of Tennessee prepared by the University of Tennessee’s Center for Business and Economic Research (CBER).

“Throughout the popular media, the theme of thriving, high-paid executives and superstar entertainers and athletes clashes with low-skilled workers whose job prospects and earnings are eroding,” the report says.

The President and the Chairman of the Federal Reserve Bank have each made comments about the distribution of income in recent weeks.

The money we make

Williamson County has the highest average per capita income of any Tennessee county at $44,298. Williamson is near Nashville and its entertainment and sports industry.

On the other hand, rural Hancock County’s per capita income was only $14,885.

In 2004, most medium to large Tennessee cities were under the national average for per capita personal income in nominal dollars.

• U.S. average: $33,000
• Nashville: $35,000
• Memphis: $32,750
• Knoxville: $30,250
• Chattanooga: $29,500
• Tri-Cities: $26,250

However, in terms of income growth, Tennessee and most of the other southeastern states have been out-performing the U.S. as a whole since 2000.

“Only Louisiana, Georgia, North Carolina and South Carolina had slower rates of growth than the U.S. average, while Alabama, Arkansas and Virginia had relatively high increases in per capita income,” the report stated. “It is worth noting that states with per capita income levels that lag the nation must have stronger growth rates in order to catch up to the national levels of income.”

Disparities across urban and rural communities arise for many reasons, but one of the most important is the education of the workforce.

Compared to the nation, world

Nationally, researchers speculate the widening income gap is due to a variety of factors, including global competition, which has slowed wage growth for lower-skilled workers, and enhanced technology, which has allowed the most skilled workers and chief executive officers to gain the most.

Education as well as the growing aging population are likely factors too.

Among the statistics noted in the report:

• Most of the nation’s wealthiest individuals work. In 1916, only about 20 percent of the richest 1 percent of the country earned money by working. Rather, their riches came from stocks, bonds and other “accumulated fortunes.” Today, about 50 percent of the richest 1 percent of the country work.

• The roster of the nation’s wealthiest individuals is ever-changing. According to the report, IRS provided data about the nation’s top 400 taxpayers over a nine-year period. During those years, only 25 percent of the taxpayers appeared in the top 400 more than once.

• The definition of rich is changing. The average adjusted gross income of the 400 “ultra-rich” rose from about $60 million in 1992 to $223 million in 2000.

• While a profound income gap exists in the U.S. and in Tennessee, it is even more dramatic at the international level. For example, in 2005, Luxembourg had the highest per capita income at $65,630 while Burundi had the lowest at $100, or about 25 cents per person, per day.


Matt Murray, (865) 974-6084,
Amy Blakely, 974-5034,