Wealth Gap Creates A Great Divide In US Cities

A huge gap is developing between the richest and poorest people living in US cities.

The wealth gap in some cities is at least $180,000 – with well-off households earning almost $200,000 a year, while the less affluent are making do on around $20,000 a year.

This massive inequality is affecting education, social services and health care as some cities struggle to raise enough taxes to pay for the cost of services.

Property prices are also under pressure as the poorest households cannot raise a deposit or mortgage to buy even some of the cheapest homes in some cities.

This leaves people who cannot afford or access services no choice but to move to a poorer suburb or to another city, according to research by think-tank the Brookings Institution.

The firm measured wealth inequality in 50 cities across the USA using a 95/20 ration, which takes the richest 5% and poorest 20% of households and looks at the difference in the spread between their annual incomes.

Rich man, poor man

On average, the wealthiest earned $196,000 a year and the poorest $18,000 in the biggest cities, while examining the whole US, the rich were slightly less well-off averaging annual incomes of $192,000, compared with $21,000 for the least well-off.

However, the research revealed that in some cities, the rich were as much as 15 times wealthier than the poor, for instance:

  • Atlanta, Georgia, top earners had incomes of $280,000 a year against the poorest earning just $15,000 – other cities with the richest out earning the poor by 15 times were San Francisco, Boston and Miami
  • The ratio between rich and poor in Washington DC; New York; Oakland, California; Chicago; Los Angeles and Baltimore, Maryland, showed the wealthy earned 12 times as much as the poor
  • 31 of the top 50 cities had an income inequality which was more than the national average of 10.8 times the earnings of the least well-off

Not all inequality is equal

Not all income inequality is equal – although the poorest households in San Francisco earn 15 times less than the rich, the wealthiest households earn $350,000 a year, while the poorest average $23,000.

In Miami, the rich do not earn as much – an average $150,000 – while the poor are among the poorest in the US averaging just $10,000 a year.

“Miami has a lot of extremely poor neighbourhoods, but a few that are very rich,” said a spokesman for the Brookings Institution.

“While we believe soaring house prices in San Francisco are pushing out the really poor to other cities.”

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