To the surprise of many, voters in four red states — Alaska, Nebraska, South Dakota and Arkansas — supported referendums in November to raise their state minimum wage. And not just by a little. Controlling for the cost of living, they will have wage floors that are higher than those of many blue states. Once Obamacare is factored in, voters in these states ironically benefit from a somewhat strengthened social safety net, even though it is one that their elected politicians mainly oppose and that is heavily subsidized by blue state tax dollars.

For blue state urbanites who toil in low-paying retail, food preparation and service jobs, for the journeyman tradespeople who once formed the heart of the middle class, for teachers, civil servants, students and young families, the American dream of homeownership — or even an affordable rental apartment — is increasingly out of reach. Adding insult to injury, rapid gentrification in these larger knowledge hubs brings the constant threat of displacement of creative workers. For even the much better paid techies, engineers, financiers and managers who are displacing them, the metropolitan version of the American dream is a cramped condo or a small house and a long commute. Many are opting to move to cheaper red states instead, further driving their growth.

Inequality has grown fastest over the past three decades in larger states with more vibrant knowledge economies, like Massachusetts, New York, New Jersey and Connecticut. In 1979, the most unequal states were poor conservative states — Mississippi, Louisiana, Arkansas, Alabama and Georgia. By 2012, New York, Connecticut, California and Massachusetts joined Mississippi, Louisiana, Florida, Georgia, Texas and Tennessee among the 10 most unequal states.

Blue state knowledge economies are also extremely expensive to operate. Their innovative edge turns on a high-cost infrastructure of research universities and knowledge institutions — a portion of which demand public subsidy. Their size and density require expensive subway and transit systems to move people around. Blue state cities like New York and San Francisco are booming, but they are hampered by potholes and crumbling infrastructure, troubled public school systems, growing inequality and housing unaffordability, and entrenched poor populations, all of which mean higher public costs and higher tax burdens.