U.S. Economy

Here Are the Parts of the U.S. With the Most Income Inequality


American cities are becoming more unequal, according to a study released on Monday by the U.S. Conference of Mayors.

In two-thirds of the 357 metro areas the report studied, the ratio of mean income to median income increased over the recession-battered years from 2005 to 2012, suggesting income gains further skewed toward the wealthy. Albany, Ga.; Ithaca, N.Y.; and Dalton, Ga., were the U.S. metro areas where that ratio increased the most. Those data reflect a larger shift: The authors write that when adjusted for inflation, median household income nationwide fell 5.5 percent from 2005 to 2012, while mean household income fell only 3 percent, continuing a multi-decade trend of more money going to the richest households. The bottom 40 percent of households netted only 6.6 percent of income growth from 2005 to 2012, while the top 5 percent took in 27.6 percent.

The study (PDF), prepared by the economic consulting company IHS Global Insight (IHS), also compares which metro areas have the most households in the top, bottom, and middle thirds of the country’s income distribution. The areas with the fewest middle-income households are mostly coastal: Out of the 357 metro areas, San Jose has the lowest percentage of households making more than $35,000 and less than $75,000, followed by the areas around Bridgeport, Conn.; Washington, D.C.; San Francisco and Oakland; Boston; and New York. The Washington-Arlington-Alexandria and San Jose-Sunnyvale-Santa Clara metro areas have the highest percentage of households making more than $75,000 and the lowest percentage making less than $35,000.

The report, prepared for an organization representing the mayors of more than 1,000 cities, doesn’t explore why some areas have especially acute income disparities. It does note that the 10 areas with the most higher-income households are in Alaska, Hawaii, California, and the Northeast, while 9 out of the 10 with the most lower-income households are in the South. As my colleague Peter Coy noted on Monday, the report also offers a bleak contrast between the jobs lost in the recession and those that replaced them, estimating the new jobs have a 23 percent “wage gap” relative to the old ones, totaling $93 billion in decreased pay. The report’s authors don’t anticipate this trend will dissipate down the road, as they predict “a further drift toward inequality in upcoming years.”

Eidelson is a reporter for Bloomberg Businessweek in Washington.

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