More Unequal Than Others: High Income Inequality in Cities and Metropolitan Areas Corrodes Public Services Nationwide

January 25, 2016

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In a perversion of George Orwell’s famous quote from Animal Farm, it appears that while all Americans are unequal, some Americans are more unequal than others. New research from the Brookings Institutions demonstrates that, based on household income, large metropolitan areas and big cities tend to be more unequal than the rest of the country. The 2014 95/20 ratio, a ratio of the average earnings at the 95th percentile against the 20th percentile, was 9.3 for the country as a whole. For the largest 100 metro areas, that ratio was 9.7. For big cities, it was 11.8. Moreover, while only 18 of the top 100 metro areas exceeded that nation’s inequality ratio, 59 of the largest 97 cities did so.

Cities and metropolitan areas, however, tended to run together. Boston exemplified high inequality both as a city and as a metropolitan area, most likely driven in part by the city’s large student population. “Anchor” cities also drove inequality in metro areas near Miami, New Haven, New Orleans, New York, and San Francisco. Washington D.C. and Atlanta stand out as cities with a high number of both very rich and very poor residence, and cities such as Cincinnati and Providence stand out as cities with very large bottom-earning populations.

But what is the impact of this inequality? Brookings was clear that the crunch affected public services and the tax base, particularly lower-income residents:

Inequality at the local level may be undesirable for a variety of reasons. It may diminish the ability of schools to maintain mixed-income populations that produce better outcomes for low-income students. It may narrow the tax base from which municipalities raise the revenues needed to provide essential public services and weaken the collective political will to make those investments. And local inequality may raise the price of public-sector goods and services for poor households, making it even more difficult for them to get by on their limited incomes.

Essentially, this inequality affects the quality of public services available, which further degrades the choices the city’s most vulnerable residents have. One fresh national reminder of this is the discovery of large amounts of lead in the public water supply in Flint, Michigan. In 2007, Brookings found that Flint between 1970-2000 had the greatest increase in income segregations among its cohort, which included “distressed” cities. This means that even among cities with financial troubles, Flint stood as an example of inequality. The city’s decreasing population—from 195,000 residents in 1960 to 100,000 residents today—helped put the city in an economic bind, causing the city to move from the Detroit water system to taking water from the Flint River in order to save money. It was when the city changed water supplies that the residents began complaining about the odor and color of their water. What’s more, lower-income residents faced a different set of choices from area businesses. The local General Motors plant stopped using the water because it corroded the auto parts at their factory. Meanwhile, the New York Times focused Sunday on the water’s impact on Flint’s poor, including a woman whose sons repeatedly broke out in rashes and were diagnosed with scabies, ringworm, and other fungal infections which failed to heal as they continued to drink the water:

Her family started drinking bottled water when it could, but Ms. Loren, who receives federal disability payments for her back and other problems and relies on food stamps, said it was not that often. “There was [sic] times when we couldn’t afford it,” she said. “We just kept drinking out of the tap.”

What’s more, the response between cities will also vary, as the ratio of inequality does not account for the composition of individual cities. For instance, while Washington, D.C. and Providence, Rhode Island have roughly equivalent inequality, D.C. has a much larger cohort of high-income households than Providence, where many more residents live below the poverty line. This has implications for the city’s tax base and for what the city can effectively do to alleviate these inequalities. These problems will likely continue to pervade local politicians, who this week across the eastern seaboard are cleaning up the effects of winter storm Jonas. Residential cleanup, water provision, housing subsidies—the bedrock of local government—all suffer when inequality thrives.