Management & Labor

Report Examines Income Gaps Across Metro Areas

A new report highlights a wide wage disparity across many regions. See data for your area.
by | August 11, 2014
Many low-income individuals and families don't qualify for unemployment insurance because they either didn't work long or often enough. AP/J Pat Carter
 

Income inequality has gradually grown in recent decades and, by most accounts, accelerated as a result of the recession.

A report published this morning by the U.S. Conference of Mayors (USCM) examines the issue at the metro area level, highlighting a wide wage disparity across many regions. The analysis, conducted by IHS Global Insight, projects further income inequality in the coming years, calling it a “structural feature of the 21st century economy.”

Although the economy finally reached pre-recession job levels nationally earlier this year, the report notes that many of these new jobs pay substantially lower wages. The manufacturing and construction industries still haven’t recovered, while the fastest growing segments of the economy tend to be lower-paying jobs in hospitality, health care and administrative support.

Nationally, the average wage of jobs lost from 2008 to 2009 was $61,637, compared to $47,171 for positions gained since. This wage gap of 23 percent is much larger than that of other recent economic recession recoveries, according to the report.

USCM recently formed a task force to study policies around the issue, led by New York Mayor Bill de Blasio and Boston Mayor Martin Walsh.

To assess metro area household income, the report grouped median household income into three categories: less than $35,000; $35,000-75,000; and greater than $75,000. In 2012, roughly a third of U.S. households fell into each group. Using these groups, the authors computed a ratio comparing the lowest and highest income distribution within each metro area. A ratio value of 1 means that the share of upper and lower-income households is equal, while higher values represents metro areas with more poorer households.

This is different than traditional measures of income inequality, but it does help to illustrate how local income distributions compare to national averages.

Smaller metros, primarily concentrated in the South, were shown to have the largest shares of low-income households. On the opposite end of the spectrum were Washington, San Jose and other areas with a much higher cost of living.

Source: IHS Global Insight, U.S. Conference of Mayors

In 261 of the 357 metros areas, the distribution of poorer households was larger than that of the top income bracket.

The size of each metro area’s middle class (click the middle column in the table to sort) is another measure worth reviewing. More than 40 percent of households fell into this bracket in Jacksonville, N.C., and Fond du Lac, Wisc., compared to only about a quarter of households in some of the more high-cost regions. Larger metro areas the report identified as having a relatively equal income distribution included Charlotte, Cincinnati, Indianapolis, Milwaukee, Phoenix, Providence, Riverside-San Bernardino and St. Louis.

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