Only three U.S. cities show higher levels of income inequality than the District, according to a new analysis of Census data — a trend driven by a superclass of high-earning residents.
The paper prepared by the D.C. Fiscal Policy Institute is a rare comparison of the District against other American cities, rather than a comparison to states. It draws from Census surveys done between 2006 and 2012 on the 50 largest cities, comparing the average earnings of the top 5 percent to those of the bottom 20 percent.
By that measure, only Atlanta, Boston and Miami have a higher disparity between top and bottom income levels.
The District’s highest earners are the wealthiest of any major city: The top 5 percent had an average yearly income of $531,769 in 2012, outstripping even New York, where the top 5 percent earned an average of $436,931. Meanwhile, the average income of the bottom fifth of earners is about average for other large cities. But the purchasing power of that income, about $10,000, is less in the District compared to many places due to the high cost of living.
The upshot, according to the report: “These figures reflect that the District’s economy has outperformed other parts of the country and led to economic prosperity for many of those at the top of the income distribution. However, the prosperity is not evenly shared.”
Some caveats: The Census data that the analysis relies on is a statistical survey based on replies to questionnaires sent to American households. Its findings are subject to a margin of error making it less precise than the decennial census. Also, the D.C. Fiscal Policy Institute is a liberal think tank that also advocates for particular policies.
In this case, the group says, the findings illustrate the need to take steps such as expanding income tax relief for low-earning households as well as increased government spending on job training, affordable housing, and health insurance.