Foon Rhee

San Francisco leads in income inequality

Peter Zavialoff of the The Wine House in San Francisco samples a glass of Chateau La Tour de By during a 2011 wine tasting at the Palace Hotel. San Francisco has the second widest income inequality gap among the top 50 U.S. cities.
Peter Zavialoff of the The Wine House in San Francisco samples a glass of Chateau La Tour de By during a 2011 wine tasting at the Palace Hotel. San Francisco has the second widest income inequality gap among the top 50 U.S. cities. Associated Press file

San Francisco may have a lot of bragging rights over Sacramento, but its huge gap between rich and poor is nothing to crow about.

In a new study out this week, the city by the bay ranked second highest for income inequality among America’s 50 biggest cities, behind only Atlanta.

Sacramento came in at 27th – in the middle of the pack, along with San Jose and Fresno. In this ranking, that’s not such a bad place to be.

The nonpartisan Brookings Institution looked at the 2013 incomes for households at the top (95th percentile) and closer to the bottom (20th percentile), then calculated the ratio between the two numbers. The higher the ratio, the worse the inequality. It’s a little broader than the notorious 1 percent, but you get the idea.

For San Francisco, the top households earned a staggering $423,171 – by far the highest income of any city. That was 17 times the lower income group’s $24,815. It’s as if the city is full of tech CEOs and lowly baristas.

For Sacramento, the top income group earned $173,466 – 9.5 times the lower group’s $18,282.

Sacramento’s rich-poor gap is lower than the average across all 50 cities, where the rich make nearly 12 times as much as those near the bottom. The income gap is bigger in these cities than the overall national average.

The Brookings study also reinforces others that found that during the Great Recession and the recovery, many rich families have grown richer, while poorer families have struggled to stay in place, or have even lost ground.

In San Francisco, for instance, households at the 95th percentile gained $92,649 in income between 2007 and 2013, while those at the 20th percentile lost $1,182.

In Sacramento, both groups lost income – $10,433 for the rich households, and $6,586 for the poorer ones.

So how to reduce the gap between haves and have-nots?

Creating more middle-class jobs is the best solution, but it’s easier said than done, especially when every city is competing for them. Building more affordable housing is expensive, beyond the means of many cash-strapped cities.

Raising the minimum wage is more of a blunt instrument, and it sparks a political fight. The statewide minimum wage is scheduled to rise from $9 an hour to $10 on Jan. 1. San Francisco voters agreed last November to raise the local minimum to $15 an hour by July 2018.

Mayor Kevin Johnson wants to look at a possible increase in Sacramento. Some labor groups are pushing for $15 an hour, or $31,200 a year for a full-time worker.

This growing chasm between haves and have-nots makes the American dream beyond the reach of too many, and will only widen divisions in our society. A concentration of wealthy people translates to more luxury stores and trendy restaurants, but also sky-high rents and home prices.

For all that glitters in L.A. and San Francisco, I’ll gladly take a city where more people can afford to live.

BY THE NUMBERS

Where California cities ranked among the top 50 U.S. cities in the gap between rich and poor, based on household incomes in 2013.

95th percentile

20th percentile

Ratio

2. San Francisco

$423,171

$24,815

17.1

9. Los Angeles

$229,310

$18,332

12.5

13. Oakland

$236,205

$19,493

12.1

22. Long Beach

$195,675

$19,854

9.9

25. San Jose

$310,325

$32,018

9.7

26. Fresno

$152,045

$15,895

9.6

27. Sacramento

$173,466

$18,282

9.5

32. San Diego

$236,093

$26,719

8.8

Source: Brookings Institution

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