Written by Nicholas Costa
The United States of America is the largest economy in the world with a GDP of about 21 trillion (World Bank). It is one of the wealthiest countries in the world, with a GDP per capita of about 63.5 thousand dollars per person (World Bank). The United States, however, is a large and diverse country. We are one of the largest and most populated nations. Our sizable and influential economy is quite different from state to state. In the following sections, we will explore how the state economies compare to one another.
GDP
The national GDP is dominated by a relatively small selection of states. Four states have a GDP of over $1 trillion, making their economies larger than most nations. Over half of the country’s GDP can be attributed to 10 states. According to the World Population Review, they are as follows:
- California: $3.12 trillion
- Texas: $1.77 trillion
- New York: $1.7 trillion
- Florida: $1.11 trillion
- Illinois: $876 billion
- Pennsylvania: $789 billion
- Ohio: $683 billion
- Washington: $632 billion
- Georgia: $628 billion
- New Jersey: $626 billion
Much of this can be attributed to population distribution. The top 10 largest state economies are some of the most populated states in the union. However, much of this is due to to industry. For example, Michigan is one of the top 10 most populated states but it ranks as the 14th largest state economy. While this is impressive, Michigan’s GDP per capita is not as high as different states in the top ten., This is likely due to the lingering effects of the recession that hit the state hard. As a result, Michigan is beat out by lesser populated states like New Jersey in total output.
Furthermore, the most populated states tend to also have the largest and most important cities in the nation. New York City, Los Angeles, Chicago, Philadelphia, San Francisco, and other familiar large economic centers are all located in the top ten states.
The smallest state economies are listed below, starting with the smallest. As we see, none of them have large economic centers or large populations:
- Vermont
- Wyoming
- Alaska
- Montana
- North Dakota
- South Dakota
- Rhode Island
- Maine
- West Virginia
- Delaware
GDP and Income Per Capita
While GDP is more straightforward, GDP and income per capita are harder to predict based on population. The wealthiest states, as measured by GDP per capita, are listed below (Statista):
- Massachusetts
- New York
- Alaska
- North Dakota
- California
- Connecticut
- Washington
- Wyoming
- Delaware
- New Jersey
As we can see, the list is dominated by small states or states with major cities. GDP per capita, though, is not generally considered an accurate tool for measuring the wealthiest states as median household income. Below, we see the states with the highest median household incomes, according to the World Population Review:
- Maryland
- New Jersey
- Hawaii
- Massachusetts
- Connecticut
- Alaska
- New Hampshire
- California
- Virginia
- Washington
Here, we see a very different list that. Most of these states contain the wealthier suburban areas of major cities. Maryland and Virginia contain high-income suburbs of Washington D.C. New Jersey and Connecticut serve the same function for New York City while Massachusetts and New Hampshire do so for Boston. California is the only large state to be featured on the list as a large population tends to dilute the median value.
At the bottom of the list are as follows, starting from the lowest median household income:
- Mississippi
- West Virginia
- Arkansas
- Louisiana
- New Mexico
- Alabama
- Kentucky
- Oklahoma
- South Carolina
- Tennessee
As we can see, all but one of these states are in “the South.” What these states have in common are rural natures, lack of large economic centers, and less access to maritime trade routes. Most are landlocked, and the few that do have sea access typically have a tiny coastline. Nashville and New Orleans are the only large cities in the region, and they are mostly medium-sized cities on a national scale.
Economic Centers
The majority of United States economic activities happen in metropolitan areas, which makes having and developing them very important for states. According to Statista, the following are the largest metropolitan economies:
- New York City (New York, New Jersey, Connecticut)
- Los Angeles (California)
- Chicago (Illinois, Indiana)
- Washington D.C. (D.C., Virginia, Maryland)
- San Francisco (California)
- Dallas (Texas)
- Houston (Texas)
- Philadelphia (Pennsylvania,
- Boston (Massachusetts, Rhode Island, New Hampshire)
- Atlanta (Georgia)
Evidently, there is a high correlation between economic centers and prosperous state economies. According to Bloomberg, only 1% of counties comprise about a third of the nation’s economy. New York City’s five boroughs itself accounted for almost 5% of GDP. This is not only due to these cities having higher populations in proportion to rural areas, but their workers are also making more money as higher-earning jobs tend to be concentrated in cities rather than rural areas.
Which metropolitan areas have the highest-paying jobs? According to Statista, the twenty largest metropolitan areas can be ranked by median household income as follows:
- San Fransisco Bay Area (California).
- Washington D.C. (D.c., Virginia, Maryland).
- Boston (Massachusetts, New Hampshire).
- Seattle (Washington).
- Denver (Colorado).
- San Diego (California).
- Minneapolis (Minnesota).
- New York City (New York, New Jersey, Connecticut).
- Los Angeles (California).
- Chicago (Illinois, Indiana).
This list should come as surprise to nobody. The Bay area is famous for its high-paying tech jobs, for example, and the Washington D.C. area is home to numerous jobs in law and lobbying, among others.
The Implications
As we’ve explored, the economy of the United States is not a monolith. Rather, it is a tale of many different states, each with unique economic conditions. There exists a great inequality between the states. This has great implications for the union.
First and foremost, this economic diversity plays a large role in the structure of American taxation. Wealthier states typically pay more in taxes than they receive in return; the opposite is true for less fortunate states. Some states become dependent on other states to maintain their government expenditure.
This difference is also relevant in culture. With social media, we are exposed to the lives of those living across the country. While this might have some benefits in creating national unity, it certainly has had some negative consequences. People living in rural West Virginia, for example, are now more and more aware of the luxurious lifestyles of people living in Beverly Hills. We have seen a growing backlash against economic inequality in the past decade; this is becoming a large issue in the cultural unity of the nation.
The Future
The current order of the economy is not set in stone. States that were previously less fortunate are beginning to rise in economic prosperity. The following states have been experiencing the highest growth GDP growth rates (Forbes):
- Utah
- Washington
- Idaho
- Colorado
- Arizona
- Oregon
- California
- Texas
- Georgia
- Florida
Markedly, many of these states are rather economic underdogs as far as states go. This is good news for states that currently find themselves at the bottom of economic rankings. Many of these states have successfully attracted population growth, high-paying jobs, and industry. Texas, for example, is becoming a technology capital (Harnham).
Regional economic inequality exists almost everywhere across the globe, with the United States as no exception. Inequality can certainly have negative effects on cultural unity. The world is constantly in flux, however. Prosperity comes and goes. Regions that were once less fortunate can soon become prosperous. All in all, the current economic situation seems to be shifting.