Over the course of a single year, from 2012 to 2013, incomes rose significantly in Seattle, Cleveland, San Jose, Louisville, Dallas and Portland, among — and here comes the caveat — people at the very top. The gains, in fact, were dramatic, if we consider households at the 95th income percentile in each city. In Seattle, the household income for these residents rose over a single year by $36,000.
This data wouldn't be particularly notable, but for a parallel reality playing out at the bottom: While the rich grew richer in each of these places, incomes for the poor didn't budget at all.
"In some ways," says Alan Berube, a senior fellow with the Brookings Institution's Metropolitan Policy Program, "the top and the bottom seem to be living in somewhat separate economies even within these places."
Berube and colleague Natalie Holmes have just published a new analysis of income inequality in the 50 largest cities in the U.S., an update to a report last year that captured how national income inequality trends are magnified in the country's biggest cities. This latest picture, drawn from 2013 U.S. census data, shows that incomes at the top rose significantly in 12 of these cities (they declined in only one of them, Albuquerque, N.M.). Households closer to the bottom — measured at the 20th percentile — meanwhile saw income gains in 11 of these 50 cities.
The key detail: There was little overlap between these two groups. Where incomes rose at the 95th percentile, there wasn't much gain at the 20th. Only two cities saw tandem increases, Jacksonsville and Houston. This picture implies that higher incomes among the wealthy don't seem to be lifting earnings among the poor nearby, at least not in the short term.
"There is a seeming disconnect between what goes on at the top, and what goes on at the bottom," Berube says. "At the city level, we're not always seeing much of a relationship between the two. That suggests that market fores alone are not going to help close this gap. If you’re concerned about it, you need to be intentional about it."
You need to pursue policies, as cities like New York, Seattle and San Francisco have tried, that would raise the minimum wage for the low-income, or invest in early childhood education for their kids, or create affordable housing that might free up more of their income.
As it stands today, the 95th percentile in Atlanta makes almost 20 times as much as the 20th percentile. In San Francisco, the top makes almost 17 times as much, in Washington just over 14 times as much.
These numbers are largely driven by high incomes at the top:
Across all of these 50 cities, households at the top earn about 11.6 times as much as those near the bottom, a measure of inequality that's worse than the nationwide average (9.3). This isn't particularly surprising. Cities are home to many of the country's high-wage jobs in sectors like tech and finance. And they also attract many of the country's poor, thanks to the stock of affordable urban housing and low-wage jobs.
And so it's not inherently a problem that San Francisco has worse inequality than, say, Scranton, Ohio. But it may be a problem if inequality is worsening in San Francisco, especially if higher and higher incomes at the top are pushing out lower-income residents. Over the longer term, it's also troubling that this data reflect very different trajectories for people at the top and bottom: In all but eight of these 50 cities, people at the top have recovered the income they lost during the recession (in adjusted dollars). In 31 of these cities, on the other hand, the poor still had lower incomes in 2013 than they did in 2007.