Income gap still growing
WASHINGTON — The income gap in major U.S. cities goes beyond the trend of rising paychecks for those at the top: Pay has plummeted for those at the bottom.
Many of the poorest households still earn just a fraction of what they made before the Great Recession began in late 2007. Even as the recovery gained momentum in 2014 with otherwise robust job growth, incomes for the bottom 20 percent slid in New York City, New Orleans, Cincinnati, Washington and St. Louis, according to an analysis of Census data released Thursday by the Brookings Institution, a Washington think tank.
“It’s really about the poor losing ground rather than these upper-class households pulling away,” said Alan Berube, a senior fellow at Brookings and deputy director of its metropolitan policy program.
Not climbing: The poorest have clawed back some of their earning power since the economy officially began to recover 6½ years ago. But the analysis suggests that strong job growth and modest pay raises have failed to pull millions of Americans back up the economic ladder.
The findings also complicate plans by presidential candidates to combat inequality because it’s unclear how tweaking tax rates on the wealthy — the Democrats largely favor increases, the Republicans cuts — will boost pre-tax incomes for the poorest. Congressional Republicans have discussed increasing tax cuts for low-income workers without children as a way to address the absence of wage growth. It’s a plan, President Barack
Obama said in his State of the Union address Tuesday night, that “we can all support.”
Housing: Persistent income disparity has become increasingly visible in the housing market. Brookings found that the bottom 20 percent of residents in the Washington, D.C., area — who earn just $21,230 — would need to spend nearly half their income on housing.
That analysis dovetails with findings released Thursday by the housing nonprofit Enterprise Community Partners. Its “Make Room” campaign found that 11.4 million families — about 26.4 percent of all renters — devoted at least half their income to rent and utilities, a share that has steadily increased over the past decade.
A surge in apartment construction has done little because in many metro areas, a most new apartments are concentrated at higher-income levels, according to a report released in December by Harvard’s Joint Center for Housing Studies. The median rent on a newly built apartment was $1,372 a month in 2014, about $500 more than what about half of renters could afford without meeting the government’s standard for being considered financially burdened.