Tuesday, January 26, 2016

This Land is Their Land

We know income inequality is a problem and is getting worse. Since the recession, income inequality has increased across the United States, and particularly in its major cities and metro areas.

Brookings calculates inequality by comparing income among households earning more than 95% of other households (the 95th percentile) with those earning more than only 20% of other households (the 20th percentile). It calls this the "95/20 ratio."

Between 2007 and 2014, the nationwide 95/20 ratio climbed from 8.5 to 9.3. In the 100 largest metro areas, the 2014 ratio was 9.7, while in big cities the ratio was much higher—an average of 11.8. Boston, which is the most unequal city according to the analysis, had a ratio of 17.8, while Washington, D.C., had a 15.1 ratio. Inequality grew in 57 of the 100 metros driven mostly by what's happening in their major cities.
San Francisco stands apart from the pack in just how rich its richest households are: They earned at least $423,000.

These metros include the Bridgeport area of Connecticut, where incomes at the top end explain widening income gaps (the area is home to a lot of hedge funds). And New Orleans, Miami, and Houston, where stagnating or dropping incomes at the 20th percentile are more likely to explain the differences.

Why does inequality matter at all? For one thing, research shows that kids from lower income families do better in life when they grow up in mixed-income areas (i.e. alongside rich kids rather than in ghettos of despair). For another, income inequality means an inequality of social contributions, like in tax payments, which leads to political arguments about the way forward. And, thirdly, says Brookings, "local inequality may raise the price of private-sector goods and services for poor households, making it even more difficult for them to get by on their limited incomes."
Also rich people live longer, especially when the gap between rich and poor is large. Researchers found that the United States "was the most unequal in longevity, with relatively high pre-tax income inequality and relatively low income re-distribution.
Top 10 U.S. Cities Where Income Inequality Is Growing Fastest:
1. Boston
2. New Orleans
3. Atlanta
4. Cincinnati
5. Providence
6. New Haven
7. Washington D.C.
8. Miami
9. San Francisco
10. New York City

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