(Morry Gash/AP)

“We ought to look where income inequality seems to be the worst. It seems to be worst in cities run by Democrats, governors of states run by Democrats and countries currently run by Democrats. So the thing is, let’s look for root causes.”

— Sen. Rand Paul (R-Ky.), Republican debate on Fox Business News, Nov. 10, 2015

Several readers wanted to know whether this statement was true. We looked into a portion of the statement for our debate roundup and determined that the claim lacked context, although the data supported his claim about Democrat-led cities. There was more to explore here, so we decided to dig further. How accurate is Paul’s claim?

The Facts

The first half of Paul’s claim comes from a Brookings Institution study on income inequality in cities. Researchers measured inequality using census data and applying the “95/20 ratio,” which is the income of households in the 95th percentile divided by the income of households at the 20th percentile. The higher the ratio, the greater the inequality.

The 2015 update of the original study showed the following cities had the highest and lowest income inequality:

(Brookings Institution)
(Brookings Institution)

Eight of the 10 cities with the most inequality have Democratic mayors (six of the eight are non-partisan offices). Miami has a Republican mayor, and the Minneapolis mayor in 2012 and 2013 was a member of the Democratic-Farmer-Labor Party. Among the cities with the least inequality, six are led by Republicans (Albuquerque,  Oklahoma City, Colorado Springs, Mesa, Arlington, Virginia Beach). Raleigh’s mayor is unaffiliated with a party. Columbus, Las Vegas and Nashville are led by Democrats and the latter two are non-partisan offices.

This correlation does not necessarily represent a causation. As regular readers know, at The Fact Checker we raise a red flag when a politician credits or blames the economic trends of a city or state to the policy decisions — or even the party affiliation — of a single executive. Our friends at PolitiFact ranked this portion of Paul’s statement Half True in 2014.

Indeed, there are other factors that the cities at either end of the spectrum have in common with each other than their mayors’ political parties. The most unequal cities also are urban cities contained within a small geographic boundary, with bigger, yet more concentrated populations. Many of the unequal cities have concentrations of high-paying jobs in technology and financial or professional services, noted Alan Berube, the study’s author and senior fellow and deputy director of the Brookings Metropolitan Policy Program.

Think: Wall Street in New York, Silicon Valley in San Francisco, Hollywood in Los Angeles.

“The lower you get in the U.S. system, the less the political affiliation [of the leader] really matters,” Berube said. Most mayors, regardless of their party, care about the economic development of their city, want to improve residents’ incomes and invest in low-income neighborhoods. Plus, structural economic policies set at the federal level have more to do with income inequality than local policies, Berube said.

The cities with the most equal income distributions mainly are geographically big cities in the South and West, with large swaths of incorporated suburban territory, the authors wrote. They are not home to concentrations of lucrative industries. These cities could agree to include a new subdivision or annex unincorporated area — therefore, expanding city boundaries to accommodate more middle-income, suburban communities.

“Large populations, diverse housing types, and generally progressive politics mean that most cities will always have higher shares of the rich and poor than smaller places. But the contemporary causes and consequences of inequality in cities vary greatly across the national map,” the authors wrote.

For the second part of Paul’s statement, his campaign pointed to the Gini index of each state from 2014 Census data. The Gini index is the most common measure of income inequality that scores states between zero (everyone earns the exact same amount) and one (one person earns all the income).

The campaign noted that the District of Columbia, New York and Connecticut had the highest Gini index (therefore the most inequality). Of course, D.C. does not have a governor, but it does have a Democratic Party-majority government body and Democratic mayor. The governors of New York and Connecticut are Democrats. The three lowest were Alaska, Wyoming and Utah — all with Republican governors.

So Paul’s claim appears to check out. But, as our friends at FactCheck.org found, the top 10 and bottom 10 states show a much less clear divide. We excluded the District of Columbia, and looked at the 10 states with the highest Gini index. The governor party control was evenly split five and five. Among the states with the lowest Gini index, three of 10 states were led by Democratic governors. See this chart below, which we compiled using 2014 Census data and 2014 state leadership composition data from the National Conference of State Legislatures.

States with the most inequality (excluding District of Columbia, which ranked the highest, with 0.522 Gini index):

State Gini index Legislative control Governor
1. New York
2. Connecticut
3. Louisiana
4. California
5. Massachusetts
6. Florida
7. Rhode Island
8. Texas
9. Tennessee
10. Georgia
0.5111
0.5005
0.4902
0.4890
0.4863
0.4834
0.4827
0.4827
0.4811
0.4801
D
D
R
D
D
R
D
R
R
R
D
D
R
D
D
R
D
R
R
R

States with the least inequality:

State Gini index Legislative control Governor
41. Iowa
42. Nevada
43. New Hampshire
44. Vermont
45. Wisconsin
46. Nebraska
47. Hawaii
48. Utah
49. Wyoming
50. Alaska
0.4433
0.4427
0.4410
0.4406
0.4397
0.4352
0.4325
0.4283
0.4270
0.4175
Split
D
Split
D
R
N/A
D
R
R
R
R
R
D
D
R
R
D
R
R
R

Rolf Pendall, director of the Metropolitan Housing and Communities Policy Center at the Urban Institute, said rising income inequality mainly has been driven by rapid growth of incomes among top earners. High-inequality states have economies that are oriented toward technology, finance, law and other industries where the United States holds significant international advantages, and whose employees earn significantly more than similarly qualified people in other locations, he said.

“These activities thrive most in metro areas that have high densities of jobs and populations. These very same metro areas also tend to have high numbers of African Americans because of historic domestic migration patterns and high proportions of foreign-born residents who have been drawn in the past three decades to these metro areas by thriving economies,” Pendall said.

Alaska and Wyoming, the states with the most equal income distribution, are more reliant on resource extraction, Pendall noted. These jobs “produced gains in middle-income jobs during the days of high international energy prices but not as many jobs at the top of the income distribution.” Utah also is mineral dependent, but its population is relatively young — meaning they generally earn less. The proportions of African Americans and Latinos — who are more likely to vote Democrat — are lower in these three states than in the high-inequality states.

The Pinocchio Test

Paul is correct that the cities and states with the highest income inequality are led by Democrats. But this is a misleading claim. In many of the cities on both ends of the scale, the mayoral offices are non-partisan. The cities with the most inequality tend to have bigger, urban populations that have more range in income distribution and an electorate that skews Democratic. Paul’s data on Democrat-led states are cherry-picked; his campaign sent three states on both ends of the scale, but expanding that grouping just slightly shows the governors’ party affiliations are more mixed than they first seem.

Moreover, he links the party affiliation of mayors and governors in cities and states with the most inequality as a “root cause.” Yet major industries, population size and demographics are more directly linked to income inequality than the party affiliation of a city’s governor or mayor.

Two Pinocchios

 


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