Posts Tagged ‘cities’

NYC

source

Liberal stories about who’s been left behind during the Second Great Depression are just about as convincing as the “breathtakingly clunky” 2014 movie starring Nicolas Cage.

For Thomas B. Edsall, the story is all about the people in the “rural, less populated regions of the country” who have been left behind in the “accelerated shift toward urban prosperity and exurban-to-rural stagnation” and who supported Republicans in the most recent election.

Louis Hyman, for his part, argues that the people who have been left behind—rural Americans and the people “who live and work in small towns”—hold a misplaced nostalgia for Main Street, which has been exploited by Donald Trump. What they really need, according to Hyman, is to find new jobs online so that they can “find their way from Main Street to the mainstream.”

In both cases, and many more like them, the great divide is supposedly one of geography: everyone is prospering in the big cities—with high-tech jobs, soaring incomes, and a proliferation of non-chain boutiques and restaurants—and everyone else, outside those cities, is being left behind.

Except, of course, nothing could be further from the truth. Yes, lots of people outside of the country’s metropolitan areas have been excluded from the recovery from the crash of 2007-08 (just as they were during the bubble that preceded it). But that’s true also of cities themselves, from Boston to San Francisco.

The problem is not geography, but class.

According to a 2016 report from the Economic Policy Institute, in almost half of U.S. states, the top 1 percent captured at least half of all income growth between 2009 and 2013, and in 15 of those states, the top 1 percent captured all income growth. In another 10 states, top 1 percent incomes grew in the double digits, while bottom 99 percent incomes fell.

cities

Much the same is true in the nation’s metropolitan areas. In the 12 most unequal metropolitan areas, the average income of the top 1 percent was at least 40 times greater than the average income of the bottom 99 percent. In the New York City area, the average income of the top 1 percent was 39.3 times the average income of the bottom 99 percent, in Boston 30.6, and in San Francisco, 30.5 times.

By the same token, some of the nation’s non-urban counties have very high levels of income inequality. Lasalle County, Texas, for example, has an average income of the bottom 90 percent of only $47,941 but a top-to-bottom ratio of 125.6. Similarly, Walton County Florida, with a bottom-90-percent income of $40,090, has a top-to-bottom ratio of 45.6.

left behind

The fact is, across the entire United States—in large cities as well in small towns and rural areas—the incomes of the top 1 percent have outpaced the gains of everyone else. That’s been the case during the recovery from the Great Recession, just as it was in the three decades leading up to the most recent crash.

While it’s true, the voters in most metropolitan areas went for Hillary Clinton and those elsewhere supported Trump. The irony is that the majority of those voters, inside and outside the nation’s cities, have been left behind by an economic system that benefits only those at the very top.

20160909pettrgb

Special mention

184602_600 download-1

183238_600

Special mention

183222_600 183219_600

cars1cars2

The folks are Bankrate have calculated, for each of the fifty largest U.S. cities, the affordable price for a new car. Their analysis is based on median incomes, average insurance costs, payments on a new car loan, and sales tax data.

The chart above shows how those affordable price points compare. The lower a city appears on the list, the more difficult it would be for the typical car buyer to come up with the money for what Kelley Blue Book said was the average price for a new car or light truck at the time of their analysis: $33,865.

Thus, for example, the average buyer in San José can afford a new car that was priced close to the national average, while residents of Detroit can only afford a car worth just over $6,000, less than a fifth of the cost of the average new car.

Sure, the average price of a new car continues to rise. But the list tells us much more about what’s happened to incomes in the United States. From 2000 to 2014, the average income of the bottom 90 percent of Americans actually fell by $4561 (from $36,913 to $32,352).*

That’s the real reason why most of the residents of the fifty largest U.S. cities can’t afford to come up with the money to purchase a new car.

 

*The data, from the World Wealth and Income Database, are in real 2014 dollars.

mcfadden-22-5

Special mention

Clay Bennett editorial cartoon 981193_1_cartoon160516-01_standard

middle-class

We already knew (thanks to a Pew Research Center report I discussed here) that the United States is no longer a middle-class nation. Now we know (based on a new Pew report), that American cities have become increasingly less middle-class in the past decade and a half.

Not surprisingly, given the size and diversity of the U.S. economy, not all cities followed the same trajectory: in some cities (a good example is Odessa, Texas, with an energy-based economy), the hollowing-out of the middle-class was because the share of adults who were upper-income increased, while in other cities (such as Springfield, Ohio, with a decline in manufacturing) there was a downward movement, with a large increase in the proportion of the adult population falling into the low-income category.*

But there are broader trends that characterize most cities: they’ve become decreasingly middle-class, and the middle income itself has declined precipitously. Thus, from 2000 to 2014, the share of adults living in middle-income households fell in 89 percent of U.S. cities (203 of the 229 metropolitan areas for which data were available, which accounted for three-quarters of the nation’s population in 2014), while in 97 percent of those cities the median income itself declined by more than 8 percent (from $62,462 in 1999 to $67,673 in 2014). In fact, double-digit losses in median incomes (10 percent or more from 1999 to 2014) prevailed in 95 metropolitan areas.

Once again, two highly cherished ideas in the United States—that the nation’s cities are characterized by and based on the middle-class, and that the middle-class itself is improving over time—are shattered by these findings.

inequality

The Pew report also revealed that there’s a strong correlation between the overall level of inequality and the decline in the “middle-classedness” of U.S. cities.

When incomes of households near the bottom of the distribution are closer to the incomes of households near the top, it means that relatively more households may be found sitting within a narrower band of income. In other words, it raises the likelihood that more households are situated within the $41,641-to-$124,924 income band that defines the middle class. Meanwhile, if the distance between the top and bottom reaches of the income distribution is stretched farther, households are spread thinner and fewer of them are likely to fall within the middle-income band.

change-inequality

The proportion of middle-income households is also strongly correlated with the change in inequality since 2000.

As it turns out, then, while the change in the share of middle-income adults in U.S. cities is not related to changes in median income, it is strongly correlated with the degree and the change in the degree of income inequality. In other words, as the United States has become more unequal in the past decade and a half, its cities have become increasingly less middle-class.

My previous question thus remains: in the midst of the current political debate, will the decline of the United States as a middle-class nation based on middle-class cities be used as a source of fear, intimidation, and scapegoating—or, alternatively, will it serve as a wakeup call to imagining and creating the kinds of real changes that will finally end the declining fortunes of the working-class and its exclusion from the major decisions about how the economy is organized?

 

*Pew’s categorization remains the same in this study: “middle-income” households are those with an income that is 67 percent to 200 percent (two-thirds to double) of the overall median household income, after incomes have been adjusted for household size and location. Here’s what the numbers look like:

middle

2014 9520 100 metro map

In 1967, the sociologist Robert Merton coined the phrase the “Matthew effect” (pdf) with respect to rewards in science, drawing on a verse in the Gospel of Matthew: “Whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them” (New International Version).

A new study by the Brookings Institution [ht: ja] confirms just how accurate the Matthew Effect is as a way of describing what has transpired in major U.S. cities and metropolitan areas during the past seven years.

We all know that household income inequality in the United States as a whole is higher today than before the crash of 2007-08. Thus, for example, between 2007 and 2014, the 95/20 ratio nationwide rose from 8.5 to 9.3.

As it turns out, among the 100 largest metro areas, the majority (57) had a significantly higher 95/20 ratio in 2014 than in 2007. They are shown in the map above. Basically, what happened is that most metro areas experienced increases because top incomes were stable or declined slightly over this period, while incomes near the bottom dropped substantially.

Copy of inequality graphics-DJ.xlsx

Indeed, double-digit slides in 20th percentile incomes were quite common across large metro areas. High-income households earned significantly less in 2014 than in 2007 in 33 of the 100 largest metro areas, but the same was true for low-income households in fully 81 of those metro areas. Many of the metro areas experiencing the largest inequality increases also ranked among those with the highest inequality levels in 2014, such as Bridgeport, New Orleans, San Francisco, Boston, and New Haven.

The increase in inequality in major U.S. cities and metropolitan areas both contributes to and reflects growing inequality across the country as a whole.

Perhaps we need parables to focus our attention on this growing gap. But we need real economic changes to eliminate it.