We know income inequality is a problem, but we don’t have a good solution: It’s getting worse.
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‚Äîan 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. 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.
In general, metros with lower-inequality cities have lower inequality overall. These include Las Vegas, Omaha, and Provo, Utah and metros in the Sun Belt, including three in Florida and two in Southern California. These places have large “suburban-style communities within their borders, and thus boast larger middle class populations relative to most cities,” Brookings says. 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.” There are moral reasons to worry about inequality, but plenty of practical ones, too.