The Morning Economic Report
6:27 pm
Sun March 2, 2014

Income Inequality - 3/3/14

A recent Brookings Institution study finds that communities that exhibit the most economic dynamism also often produce the greater levels of income inequality. Income inequality is far greater in cutting edge cities like New York and San Francisco relative to Columbus, Ohio or Wichita, Kansas.

As reported in the New York Times, cities with more equal distributions of income are typically not home to the sectors that drive rapid economic expansion like technology and finance.  They are more likely to be dominated by industries such as transportation, logistics and warehousing.  America’s low inequality cities tend to be concentrated in the south and Midwest.

The single largest increase in inequality between 2007 and 2012 occurred in San Francisco, where earnings for the typical low-income household declined by $4,000 but expanded $28,000 in inflation adjusted dollars for high income households.  Cleveland, Sacramento, Tucson and Fresco also experienced sharper levels of inequality, but not because the rich got richer – merely because the poor became poorer.  The 2007-2012 period encompasses the great recession and the soft recovery that followed.