In the wake of the U.S. Great Recession, income inequality — the unequal distribution of individual or household income across a population — has become an increasing point of concern and debate among politicians, academics, journalists and even Wall Street. Anecdotal evidence and academic research indicate that the benefits of the country’s slow economic recovery have not been equally distributed — and that the winners are often at the top of the income ladder, while those below continue to struggle.

While the United States now has the same number of private-sector jobs it did in 2008, those created during weak recovery look very different than the ones lost during the economic downturn — in particular, they tend to pay less, as revealed by a 2014 analysis of Bureau of Labor Statistics data by the National Employment Law Project. This trend has been aggravated by the continued decline in the real value of the minimum wage as well as a sharp rise in the concentration of wealth. A 2014 paper in the Quarterly Journal of Economics analyzed long-term data on eight of the largest developed economies and found that wealth-income ratios have been rising over the last four decades and, unconstrained, they could return to the high levels of inequality observed in the early 19th century.

A 2013 study by Harvard University and U.C. Berkeley looked at U.S. income mobility — the chance of a child from the bottom fifth of income rising to the top fifth by the time he or she is an adult — and found considerable regional variation. One of the U.S. cities with the least generational mobility was Atlanta, Georgia — children in the bottom fifth of income had just a 4% chance of rising to the top fifth in their lifetime. That was less than half the rate in Salt Lake City (11.5%), San Jose and San Francisco, Calif. (both 11.2%), Boston, Mass. (9.8%), and New York City (9.7%), and below even that of Detroit (5.1%). Some of these metropolitan areas have seen a renaissance as they’ve moved firmly into a postindustrial era, yet questions of racial segregation, the availability of affordable housing and the impact of gentrification remain.

Discussions of pervasive income inequality tend to focus around larger cities that, with some exceptions, have not faced extended periods of population loss and economic decline. A 2014 study in Urban Affairs Review, “The Uncoupling of the Economic City: Increasing Spatial and Economic Polarization in American Older Industrial Cities,” seeks to address this issue by looking at 10 cities whose economies once centered around heavy industry and that have been striving to reinvent themselves — Baltimore, Buffalo, Cincinnati, Cleveland, Detroit, Milwaukee, Newark, Philadelphia, Pittsburgh and St. Louis. The researcher, Alan Mallach of the Center for Community Progress in Washington, D.C., sought to better understand the effects of successful revitalization of central business districts (CBDs) on income levels, spatial settling patterns and racial inequality.

The study’s findings include:

• There is a negative correlation between economic growth in CBDs and the income gap. In cities with the highest levels of central core economic development, the income gap is wider than in those with less rapid growth in their CBDs.
• Shifts from a manufacturing-based economy to one rooted in higher education and health services have led to significant growth in central core areas, but that growth has simultaneously been met by continued “erosion of jobs and workforce attachment in much of the rest of the city, reflecting the uncoupling of the city’s newly emerging economy from the city’s residents.”
• Active workforce participation decreased at a faster rate than population size: Between 2000 and 2010, most of the cities surveyed lost on average 8% of their population but lost 16% of their resident workforce between 2002 to 2011. This reflects growing marginalization of large portions of the cities’ populations.
• The number of commuters from outside the city who worked inside, primarily in their CBDs, grew by an average of 10% between 2002 and 2011, while the number of residents holding jobs in the city declined by 17%. Overall, job growth averaged only 0.4% over this period.
• Income growth for African-Americans lagged behind that for white residents in all 10 cities: “White households saw net income growth in constant dollars in four of the 10 cities, while their income growth significantly outstripped the national average in three more. African-Americans in all 10 cities saw their median income decline in constant dollars, with those declines pronounced in all cities except for Newark and Baltimore.”
• The number of black households with annual incomes above $50,000 tended to decrease more rapidly than the total number of black families with incomes less than $50,000 per year. For example, in Cleveland the total number of black family households declined by 18% between 2000 and 2011, while the number with an annual income above $50,000 fell by over 40%.
• The significant gap in educational attainment between white and African-American residents contributes to the employment and income differences, and the education and income gaps have been increasing over the last decade. For example, 42% of white adults in St. Louis have college degrees, compared with only 12% of African-American adults.

The study findings suggest that, in medium-sized, formerly industrial cities, shifts from a manufacturing-based economy to an economy rooted in higher education and health services have led to significant growth in central core areas, but that growth has not necessarily improved measures of economic inequality within the city. Many of the cities’ residents, most notably those who are poor, less educated or African-American residents, don’t participate in or benefit from the new economic activity. “The outcome is an increasingly affluent and well-educated — and growing — white population in these cities,” Mallach concludes, “juxtaposed against an increasingly poor or near-poor African-American population lacking the education and skills to compete for an increasingly white-collar, college-degree-oriented job base clustered around downtowns and major educational and medical institutions.”

Related research: A 2013 research roundup, “Economic and Social Change in U.S. Cities,” explores the wide range of recent scholarship on the ongoing transformation of urban areas in the United States. It includes sections on economics, mobility, environment, crime, health and demographics.

 

Keywords: poverty, inequality, race, economics, cities, urban studies, economic development, shrinking cities, legacy cities, rust belt, urban policy, gentrification