Foon Rhee

The Numbers Crunch: Income inequality gets worse in America’s cities

Supporters cheer Sen. Bernie Sanders in Peterborough, N.H., on Thursday. He is giving Hillary Clinton a run for her money with his crusade against income inequality.
Supporters cheer Sen. Bernie Sanders in Peterborough, N.H., on Thursday. He is giving Hillary Clinton a run for her money with his crusade against income inequality. The Associated Press

Thanks to Sen. Bernie Sanders, income inequality is center stage in the 2016 presidential race, at least on the Democratic side. At Monday’s crucial town hall in Iowa, he might want to mention a new study showing the gap between rich and poor is getting even wider in America’s biggest cities.

As you might expect, San Francisco is among the most unequal cities, because so many techies are making so much money. But in Los Angeles, Fresno and Sacramento, the divide is worsening because so many workers had their paychecks shrink so much during the recession.

Researchers at the nonpartisan Brookings Institution measured inequality by comparing the incomes of those earning more than 95 percent of all other households and those making more than only 20 percent of other households. The higher that “95/20 ratio,” the greater the inequality.

For example, in San Francisco, the high-income household made more than $383,000 in 2014, while the lower-income one brought in barely $26,000. That inequality ratio of 14.5 was the ninth-highest in the nation. Between 2007, just before the financial meltdown, and 2014, five years into the recovery, San Francisco’s ratio rose by 1.8 points because average household income at the upper end increased by 14 percent.

In Sacramento, the higher-income household earned nearly $182,000, while the poorer one made about $18,500 – a ratio of 9.8, ranking 50th among 97 cities studied. Its ratio increased by 2.4 points between 2007 and 2014, mostly because income at the lower end plummeted by 27 percent.

Among the top 100 metro areas, San Francisco ranked third and Sacramento fourth for the biggest increase in inequality.

Nationally, the inequality ratio rose from 8.5 in 2007 to 9.3 in 2014. In cities where the income gap widened, the rich basically held steady while the poor got poorer. In general, suburbs are less unequal because they have a bigger middle class.

While inequality is a big national issue, its impact is very local. The Brookings researchers say inequality can reduce tax revenues to fund essential services, make it more difficult for public schools to keep diverse student populations and even raise prices for poorer households, especially for housing.

So while it’s good that some presidential candidates are debating inequality, voters should demand that local candidates address the issue as well.

Sacramento’s two most prominent contenders in the June mayoral election, City Councilwoman Angelique Ashby and former state Senate leader Darrell Steinberg, talked about jobs, the minimum wage and affordable housing at their first televised forum last week.

I’m not expecting local candidates to call, Sanders-like, for a political revolution against the 1 percent. Still, I’d like to hear more on how they propose to help the middle class share more of the wealth.

By the numbers

Where selected California cities rank in income inequality, based on the ratio between household incomes at the 95th and 20th percentiles, and how much those incomes changed between 2007 and 2014:

9. San Francisco: $383,202 (+14%), $26,366 (unchanged)

13. Los Angeles: $240,963 (-4%), $19,223 (-10%)

36. Fresno: $162,284 (-5%), $15,274(-22%)

46. Stockton: $168,640 (-5%), $16,585 (-34%)

50. Sacramento: $181,869 (-3%), $18,502 (-27%)

69. San Diego: $243,553 (-1%), $27,304 (-6%)

82. Bakersfield: $190,160 (-1%), $23,124 (-16%)

84. San Jose: $292,443 (+7%), $36,120 (+1%)

Source: Brookings Institution