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Income Inequality Climbing in Many Large Cities

Larger metro areas experience some of the highest income inequality, and since the Great Recession, it’s only gotten worse. On Thursday, fast-food workers in 100 cities protested for higher wages.

Big metro areas such as Boston and New York are home to some of the nation’s highest-paying jobs and most affluent neighborhoods. At the same time, these places have high rates of poverty. So it’s perhaps not surprising that the nation’s larger metro areas have the highest rates of income inequality. 

Multiple studies have noted this phenomenon. But more recent data suggests that, in the aftermath of the Great Recession, many of these regions saw the income gap widen even further.

One measure the Census Bureau uses to compute the level of income inequality among households is known as the Gini coefficient. Comparing 2007 and 2012 data shows that the Gini coefficient climbed slightly in most of the country’s 52 metro areas with more than a million residents. In fact, it rose faster in the largest metro areas than it did in the nation as a whole. In 29 metro areas, the increase was large enough to be considered statistically significant, while only Buffalo saw a statistically significant decline in income inequality.

Large metros have higher rates of income inequality mostly because they tend to attract more residents at the extreme opposite ends of the economic spectrum. Big cities often draw wealthy residents to high-paying industries; at the same time, these metro areas may offer the poor their only shot at affordable housing within a region. That sets up a wide income disparity that’s less prevalent in smaller cities, says Alan Berube of the Brookings Institution’s Metropolitan Policy Program. “You have this enormous distance between people at the top and people at the bottom that is less characteristic of smaller cities,” he says. 

As inequality has worsened, some big-city mayors are rallying support for initiatives aimed at helping the poor. Seattle Mayor Ed Murray created an income inequality advisory committee that crafted the city’s minimum wage legislation. New York Mayor Bill de Blasio and Boston Mayor Martin Walsh, who both campaigned on the issue, are leading a new inequality task force convened by the U.S. Conference of Mayors.

In the past, much of the dialogue around inequality remained confined to the federal level ­-- where many believed it could be broadly addressed. Now, Democrats are pushing the issue in the lead-up to the midterm elections later this year. Republicans, meanwhile, often counter that wage inequality is not a problem that requires governments to intervene; many contend that it’s a matter of boosting individual skill sets so people can move up to higher-paying jobs. 

Regardless, Washington remains gridlocked for now. At the local level, Berube says officials simply don’t have the tools to reduce income inequality in any significant way on their own. Local governments can, though, work to expand access to affordable housing and provide workforce training. “The antidote to inequality is building a stronger middle class and having pathways to the middle class,” Berube says. Localities should focus on attracting jobs that pay well and investing in education early, he says. 

For the most part, those on the lower rungs of the economic ladder were hit hardest by the recession. Since 2007, the Census’ current population survey data indicates that the inflation-adjusted mean household income fell 10 percent for the lowest fifth of the income distribution. For the top fifth, the decline was only 2 percent, while incomes for the top 5 percent remained about the same.

Several metro areas with the highest income inequality are found in Florida, a state that suffered severe job losses during the recession. Much of the state’s economy is tied to either low-wage jobs, such as agriculture or tourism, or to jobs in real estate and construction, two areas that incurred deep cutbacks when the housing bubble burst.

In Tampa, Mayor Bob Buckhorn wants to incentivize the growth of other sectors where the state enjoys an advantage, such as defense contracting and biotech. “I think we have changed our economic DNA,” he says. “Moving from the low-wage jobs will allow us to eventually narrow the gap.”

Buckhorn views President Obama’s public statements on inequality as a “call to action.” While Tampa can’t tackle wage inequality in the way that Washington can, it has taken other steps to prop up lower-income residents. The Tampa Housing Authority recently opened its second new mixed-use affordable housing development, with a third complex set to open next year. Tampa has also worked to boost women- and minority-owned businesses, revamping the permitting process and making it easier for those businesses to win city contracts. 

But bridging the divide, Buckhorn says, will take more than putting a roof over people’s heads. “If you aren’t providing job training, a GED or higher education,” Buckhorn says, “then you really aren’t solving the problem.”

 A high-profile study published last year by economists at Harvard University and the University of California, Berkeley, assessed the extent to which children in lower-income families move up the income distribution ladder later in life, finding substantial differences across regions. Salt Lake City and Pittsburgh, for example, had the highest intergenerational upward mobility of all larger metro areas. 

In the Southeastern U.S., though, it’s a much steeper climb. Areas with high mobility were correlated with areas experiencing less income inequality and residential segregation. These areas also had better schools, social capital and family stability.

Income Inequality Data

Metro Area 2012 Gini Index 2007 Gini Index Change Statistically Significant Increase?
Washington-Arlington-Alexandria, DC-VA-MD-WV 0.439 0.436 0.003 No
Raleigh-Cary, NC 0.4393 0.444 -0.0047 No
Rochester, NY 0.4429 0.435 0.0079 No
Grand Rapids-Wyoming, MI 0.4446 0.435 0.0096 No
Portland-Vancouver-Hillsboro, OR-WA 0.4451 0.44 0.0051 No
Richmond, VA 0.4453 0.434 0.0113 No
Baltimore-Towson, MD 0.4519 0.448 0.0039 No
Indianapolis-Carmel, IN 0.4544 0.446 0.0084 No
San Antonio-New Braunfels, TX 0.4556 0.46 -0.0044 No
Louisville/Jefferson County, KY-IN 0.4564 0.457 -0.0006 No
Columbus, OH 0.4575 0.448 0.0095 No
Denver-Aurora-Broomfield, CO 0.4577 0.45 0.0077 No
Orlando-Kissimmee-Sanford, FL 0.4623 0.451 0.0113 No
Nashville-Davidson-Murfreesboro-Franklin, TN 0.4651 0.464 0.0011 No
Pittsburgh, PA 0.4662 0.465 0.0012 No
Dallas-Fort Worth-Arlington, TX 0.4664 0.461 0.0054 No
Oklahoma City, OK 0.4735 0.468 0.0055 No
Birmingham-Hoover, AL 0.48 0.476 0.004 No
Memphis, TN-MS-AR 0.4806 0.488 -0.0074 No
Tampa-St. Petersburg-Clearwater, FL 0.4831 0.48 0.0031 No
Los Angeles-Long Beach-Santa Ana, CA 0.4911 0.487 0.0041 No
New York-Northern New Jersey-Long Island 0.5049 0.504 0.0009 No
Virginia Beach-Norfolk-Newport News, VA-NC 0.4387 0.418 0.0207 Yes
Riverside-San Bernardino-Ontario, CA 0.4401 0.426 0.0141 Yes
Salt Lake City, UT 0.4418 0.411 0.0308 Yes
Minneapolis-St. Paul-Bloomington, MN-WI 0.4431 0.43 0.0131 Yes
Buffalo-Niagara Falls, NY 0.4473 0.464 -0.0167 No
Seattle-Tacoma-Bellevue, WA 0.4479 0.441 0.0069 Yes
Las Vegas-Paradise, NV 0.4531 0.43 0.0231 Yes
Sacramento-Arden-Arcade-Roseville, CA 0.4542 0.426 0.0282 Yes
Kansas City, MO-KS 0.4545 0.436 0.0185 Yes
Phoenix-Mesa-Glendale, AZ 0.4564 0.444 0.0124 Yes
Hartford-West Hartford-East Hartford, CT 0.4566 0.443 0.0136 Yes
Providence-New Bedford-Fall River, RI-MA 0.4607 0.449 0.0117 Yes
Milwaukee-Waukesha-West Allis, WI 0.4609 0.448 0.0129 Yes
St. Louis, MO-IL 0.4611 0.449 0.0121 Yes
Austin-Round Rock-San Marcos, TX 0.4631 0.451 0.0121 Yes
San Jose-Sunnyvale-Santa Clara, CA 0.4662 0.451 0.0152 Yes
San Diego-Carlsbad-San Marcos, CA 0.4665 0.451 0.0155 Yes
Cincinnati-Middletown, OH-KY-IN 0.4668 0.453 0.0138 Yes
Atlanta-Sandy Springs-Marietta, GA 0.4723 0.453 0.0193 Yes
Detroit-Warren-Livonia, MI 0.4735 0.453 0.0205 Yes
Chicago-Joliet-Naperville, IL-IN-WI 0.4761 0.466 0.0101 Yes
Tampa-St. Petersburg-Clearwater, FL 0.4762 0.456 0.0202 Yes
Jacksonville, FL 0.4775 0.446 0.0315 Yes
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 0.4776 0.466 0.0116 Yes
Cleveland-Elyria-Mentor, OH 0.4808 0.459 0.0218 Yes
Boston-Cambridge-Quincy, MA-NH 0.4809 0.468 0.0129 Yes
Charlotte-Gastonia-Rock Hill, NC-SC 0.4813 0.459 0.0223 Yes
San Francisco-Oakland-Fremont, CA 0.4898 0.477 0.0128 Yes
New Orleans-Metairie-Kenner, LA 0.4971 0.476 0.0211 Yes
Miami-Fort Lauderdale-Pompano Beach, FL 0.5021 0.492 0.0101 Yes

Source: Governing calculations of 2012 and 2007 American Community Survey Estimates

Income Inequality Map

Metro areas with larger markers below had greater income inequality in 2012, as measured by the Census Bureau's Gini Coefficient. (Click to open interative map.)


Mike Maciag is Data Editor for GOVERNING.
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