Income disparity – the divide between those at the top of the economic ladder and those stuck on lower rungs – is the era’s most explosive political issue.
It has, however, a very ironic twist. As a recent report from the Brookings Institution reveals, income disparities are widest in the nation’s bluest – most liberal – cities and much narrower elsewhere.
Brookings compared 2013 family incomes of the most affluent 5 percent to those of the poorest 20 percent in the nation’s 50 largest cities, calculating a ratio for each.
The largest disparity was found in Atlanta, where the average income of 5-percenters ($288,159) was 19.2 times that of the 20-percenters ($14,988).
San Francisco was second at 17.1 times – an average of $423,171 at the top and $24,815 at the bottom.
Los Angeles was ninth highest at 12.5 and Oakland was 13th highest at 12.1. All other large California cities – Long Beach, San Jose, Fresno, Sacramento and San Diego – were below the national big-city average of 11.6.
With few exceptions, cities with high disparity ratios are solidly Democratic in voting (New York, Chicago, Boston, Washington, Minneapolis, for example) while cities at the lower end of the scale tend to be in conservative Midwestern, Southern and Southwestern states, such as Fort Worth, San Antonio, Wichita, Nashville and Oklahoma City.
San Francisco, with the nation’s second highest income disparity, easily tops all large cities in the sheer size of 5-percenters’ average incomes at $423,171. San Jose is second highest at $310,325, while only a few other cities cracked the $200,000 threshold.
Income gaps in blue cities are exacerbated by their very high costs of living, especially for housing, which is the major factor in California’s having the nation’s highest level of poverty.
In Los Angeles, rents average 48.2 percent of income, 60 percent above the national level and the highest of any major U.S. city, while San Francisco is third at 44 percent, according to real estate tracking firm Zillow.
A family earning $18,071 in Columbus, Ohio, its 20-percenter average, is much better off than one in Los Angeles at $18,332 since Columbus’ rents average just 26.2 percent of income. And by the way, the unemployment rate in Los Angeles is 7 percent, but just 4.5 percent in Columbus.
Zillow says Los Angeles and San Francisco are among the nation’s worst laggards in building new housing, keeping rents artificially high.
Blue-city politicians claim to help the poor with increases in minimum wages, but the burden of paying them mostly hits small employers, rather than the 5-percenters, and thus may eliminate jobs.
Moreover, any pay raises are rapidly absorbed by rising rents that could be alleviated by politicians, if they had the guts to change legal and political constraints on new construction and improve supply.
Call The Bee’s Dan Walters, (916) 321-1195. Back columns, sacbee.com/dan-walters. Follow him on Twitter @WaltersBee.