Big cities are less equal than the rest of the country

February 20, 2014

Not only is income inequality worse in America’s big cities than the nation as a whole, but it got worse through the recession, according to a new report.

As of 2012, the rich are richer and the poor are poorer in the 50 largest cities than the national average, according to the findings from the Brookings Institution. Just three — Denver, Seattle and El Paso — saw inequality shrink, marginally, since before the recession. For the rest, things got worse.

Income inequality in the report is measured as the ratio between homes in the 95th and 20th percentiles. (Those earning more than 95 percent of all others and those earning more than 20 percent of all others.) Nationally, a household in the 20th percentile earned $20,968 in 2012. In the 50 largest cities, it earned nearly $3,000 less. At the other end of the spectrum, a 95th percentile household earned $191,770 nationally and about $4,500 more in big cities.

Big-city income inequality (Brookings Institution)

Overall, 31 of the 50 largest cities were more unequal than the national average in 2012. The cities with the biggest disparities in 2012 were Atlanta, San Francisco, Miami  and Boston:

In each of these cities, a household at the 95th percentile of the income distribution earned at least 15 times the income of a household at the 20th percentile. In Atlanta, for instance, the richest 5 percent of households earned more than $280,000, while the poorest 20 percent earned less than $15,000.

The cities with the lowest inequality are generally Southern and Western, have broad borders and include “suburban” neighborhoods, according to the report.

Things got worse through the recession. In eight of the ten cities that saw inequality worsen the most, everyone got poorer, but the poor were much harder hit. San Francisco saw the largest increase in inequality from 2007 to 2012. Incomes for a household in the 20th percentile dropped $4,000, while those in the 95th percentile rose by $28,000. Inequality also rose in a statistically significant way in 18 other cities. But the composition of a city’s households can vary. In San Francisco, the ratio is high because the rich are very rich. In Miami, it’s high because the poor are very poor.

Big-city income inequality. (Brookings Institution)
Big-city income inequality (Brookings Institution) 

Read more:

This 50-state chart shows how the 1 percent is gobbling up income

This 50-state chart shows how the 1 percent is gobbling up income

Niraj Chokshi reports for GovBeat, The Post's state and local policy blog.
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