America’s 1% earners club is getting even more exclusive.
That’s according to a new Business Journals analysis of data from the IRS, which showed the cutoff for the nation’s top 1% of earners grew by 25% between 2020 and 2021 to $699,008.
The data is based on the 2021 tax year and percentiles are based on total tax filers, so they don’t distinguish by marital or household status.
The increase was fueled in large part by the surging salaries that accompanied the post-pandemic labor shortage and the turnover tsunami, as well as the stock market’s post-pandemic bull market that has sparked growth at a number of investment brokerage firms.
By comparison, the cutoff to make the top 10% of earners in America — $172,677 — grew by 12% between 2020 and 2021.
While 1,518,179 Americans made the top 1% cut in 2020, that number dropped to 1,486,807 in 2021 — a decline of 2%.
Washington, D.C., once again had the highest salary threshold for its top 1% of earners at $1,071,426, while Connecticut was again not far behind at $1,022,499.
At the other end of the spectrum, West Virginia ($373,106), Mississippi ($391,112) and New Mexico ($422,572) had the lowest thresholds for the top 1%.
Since 2016, the national adjusted gross income cutoff to be part of the top 1% has since increased by 45%.
The increases were the highest in Idaho (73%), Wyoming (73%), Washington (71%), Montana (69%) and Nevada (67%).
Oklahoma (26%), Mississippi (28%) and West Virginia (29%) had the smallest increased between 2016 and 2021.
Several of the states with the largest increases also saw significant net migration during the pandemic — including a surge of new residents to mountain towns across the West.
Those moves were part of a broader Great Migration that saw millions of Americans relocate during the height of the Covid-19 pandemic.
However, high interest rates and increasing housing costs eventually cooled the trend.
Jeffrey Roach, chief economist for LPL Financial noted in a recent report that the Great Migration dynamics no longer exist.
“The geographic reshuffling may be over in earnest as opportunities for remote work are likely shrinking in response to an overall cooling of the labor market and as corporate policies are getting less flexible on work arrangements.”
The Great Migration may be over, but the trend did result in a significant amount of wealth — and millionaires — moving to new states. The trend had a substantial effect on home prices, tax bases and development trajectories.
The significant gains in wealth since pandemic have been one factor fueling growth at investment firms, which have seen significant headcount growth in recent years.