Atlanta is the capital of U.S. inequality for the second year in a row, according to a Bloomberg analysis of large American cities with a population of at least a quarter-million.
Atlanta’s average income for the top 5% of households exceeded $663,000 while families in the bottom half of the population earned less than $65,000 — a ratio of 10.2 to 1. Nationwide, the ratio was 6.7.
Bloomberg measured the distribution of household income in 87 cities using 2018 data from the U.S. Census Bureau’s American Community Survey. Atlanta earns the title of inequality capital with a Gini coefficient of 0.57, followed by Miami, New Orleans and New York. The scale ranges from zero, which reflects absolute equality, to one — complete inequality.
Data on inequality is complex, and it’s not always clear what it’s signaling about the economy of a region or country.
Recent Federal Reserve research said that a “relatively low level of regional wage inequality is often the result of a weakening local economy, while relatively high regional wage inequality is often a consequence of strong but uneven economic growth.”
Thus, inequality sometimes springs from positive events. Increased demand for high-skilled workers can lead to more robust wage growth for employees toward the upper portions of the wage distribution, while people less well paid may not share the gains. The Fed analysis shows that regions where manufacturing jobs have plummeted over the past three decades may have weaker demand for workers near the high end thus lowering regional wage inequality.
Shrinking Middle Class
Atlanta’s geographic boundaries contribute to its high inequality ranking. The official city limits only hold about 10% of the greater metro-area population.
Cities are too small a geographical area to measure income equality since the middle class often has fled to the suburbs, Georgia State University professor Dan Immergluck said. If the city lacks a significant middle class population it will rise in inequality while the larger region, with a robust middle class, will show less discrepancy.
Atlanta also has suffered from a lack of economic mobility. It ranked 49th of 50 metro areas in a 2014 Harvard study of inter-generational mobility — or poor children growing up to become well off. And Georgia ranks in the bottom third of the poorest states in the nation.
Cleveland moved to the No. 5 spot in the inequality rankings, from 22nd on the list the previous year. Half of the city’s households made just below $30,000, according to the census, whereas those among the top 5% of earners made an average of $262,924 — 36% higher than the previous year.
The cities that saw the biggest jumps in inequality relative to their peers were Irvine, CA (which jumped 34 spots), Fort Worth, TX (up 24 spots) and Raleigh, NC (up 20).
Among those making big moves in the opposite direction — in other words, becoming more equal — were four cities in California: Stockton, Long Beach, Sacramento and Chula Vista.