Income inequality: Among US cities, bigger ones are more unequal

Inequality is unequal across America's cities, according to a new report from the Brookings Institution.

The report, published Thursday, confirms what US census data have long suggested: All cities have inequality in terms of their residents' incomes, but some of most economically thriving, largest cities, such as Boston and New York, have much more inequality than others.

“It turns out that big cities are more unequal places than the rest of the nation,” says Alan Berube, senior fellow at the Brookings Institution Metropolitan Policy Program and the author of the report, in an e-mail to The Monitor.

“But not all cities are equally unequal,” he says.

On the whole, income inequality had not been increasing in most cities across the US, the report found. From 2007 to 2012, just 18 cities among the 50 biggest ones had statistically significant increases in their inequality ratios, according to the report. Yet inequality remains a hot-button issue, becoming a cornerstone of both the Obama administration’s and local officials’ policy agendas.

Indeed, the report comes as a number of big-city mayors – some newly elected to their posts – have pledged to put income inequality at the forefront of their agendas.

In Boston, Mayor Martin Walsh campaigned for the post he assumed last month on a platform of easing the jutting disparities between Boston’s richest and poorest residents – a difference that had become apparent as the state capital sprouted condominiums and glassy office buildings under his predecessor.

And in New York, Mayor Bill de Blasio has promised to whittle down a citywide income gap that he billed as a “tale of two cities” – one a place of penthouses and brownstones; the other, one of ailing public housing and shelters.

The cadence of those two mayors' promises appears well chosen, since both cities are among America’s most unequal, according to the report.

Atlanta, San Francisco, Miami, Boston, Washington, and New York are the most US unequal cities, the report found. The least unequal cities are: Virginia Beach, Va.; Arlington, Texas; Mesa, Ariz.; Las Vegas; Wichita, Kan.; and Colorado Springs, Colo.

In general, the most unequal cities boast among the nation’s most boast-worthy economies, while the less unequal cities sport more middling ones.

“Cities with some of the higher-flying sectors of the economy – finance, technology, professional services – exhibit higher levels of inequality,” Mr. Berube says.

In the top six unequal cities, except Miami, the 95th percentile’s income is precipitously higher than it is in the six least unequal cities. In San Francisco, home to a technology sector bursting at the purse seams, the 95th percentile income is at $353,576, and in Boston, it’s at $$223,838. That’s compared with the 95th percentile in Virginia Beach, which is $187,652, and in Wichita, where it's $151,069.

But in those cities where the highest earners are notably rich, the poor are also notably poor. The bottom 20th percentile in San Francisco earns less than about $21,000 a year, and that low-earning group makes less than about $14,000 a year in Boston and Atlanta. That figure is much higher in Virginia Beach – about $31,000 – and in Arlington, where it’s about $24,000.

Part of the reason for the stark inequality in cities with soaring economies might be that big-paying sectors attract big earners – and big spenders – who in turn employ, and draw to the city, lower-income residents, Berube says.

Another factor is that bigger cities, by sheer size, tend to be diverse, packed with different kinds of neighborhoods, the report said. The less unequal cities tend to be essentially “overgrown suburbs,” according to the report.

The fact that the most economically robust cities are also the most unequal does not mean that addressing inequality there would mean depressing their economies, flattening a New York into a Wichita, the report said.

“Just because high-flying industries and inequality show up in the same cities ... doesn't mean that alleviating inequality must threaten those industries,” Berube says.

Anti-poverty measures, such as promoting affordable housing, are more likely to aid a city’s economic growth than to squash it, curbing the outflow of swaths of the needed workforce that can no longer afford steep housing costs, he says.

The report also noted that not all unequal cities are unequal in the same way – a point that could be valuable in strategizing how best to address each city’s inequality problems.

For example, San Francisco is extremely unequal because its richest residents have sky-high incomes: The top 5 percent make more than $353,000.

But Miami tops the unequal list not because its rich are especially rich – top earners there make about as much as top earners in the least unequal cities – but because its poor households make extraordinarily little. The bottom 20 percent make less than about $10,000 a year, according to the report. 

Indeed, the report emphasized that in most cities (albeit not San Francisco) the root cause of increasing inequality is not the rich getting richer, but the poor getting poorer.

In 39 out of the 50 biggest US cities, 95th-percentile incomes declined from 2007 to 2012, the report found. So, too, did 20th-percentile incomes – but much more so, at least in most cities, according to the report.