Where Income Inequality Thrives

Libby Kane
Posted

income inequalityWhen you think of a major American city like New York or San Francisco, what comes to mind?

Frenetic sidewalks? Gridlocked traffic? The fact that you can get 24-hour takeout from two dozen local restaurants?

Here’s one for you: striking income inequality.

A new study from Washington think tank the Brookings Institution finds that income inequality spikes in “economically vibrant” cities like New York, San Francisco and Miami.

Analyzing local income data from American cities, the researchers broke down how much more the highest-earning residents brought home than the lowest-earning. As the New York Times explains, a high-income resident in Boston makes 15 or 16 times as much as those on the other end of the scale; in Virginia Beach, income between the two groups is multiplied by a factor of just six or eight.

The two-part reasoning the researchers put forth for this pattern isn’t exactly shocking. Part one: The rich are getting richer, and they’re getting richest in the centers of industry that drive much of the country’s economic growth, like technology and finance. Those centers are located in the country’s biggest cities.

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Cities with better equality measures tend to be prominent in other industries, such as transportation and warehousing. They also tend to be in the South and Midwest, and cover a larger geographic area. In these more equal cities, such as Columbus, Ohio and Tucson, Ariz., the highest earners’ income is generally lower than it would be in the cities demonstrating the most inequality.

Part two of the researchers’ explanation is that the lowest earners were those hit hardest by the recession, and they haven’t gained back the ground already covered by the highest earners. That’s a nationwide pattern, but the researchers do differentiate between national and local income inequality.

While local inequality is influenced by larger economic forces, it is also heavily determined by who chooses to move there. In other words, New York probably attracts both the wealthy financier as well as the poorer recent immigrant, which contributes all the more to its income disparity.