New Report Shows Huge Income Gap Between Richest and Poorest in DC

March 19, 2012

Everyone who lives in the District of Columbia knows that there’s a yawning gulf between the haves and the have-nots. But the new income inequality report from the DC Fiscal Policy Institute could still be a shocker. I know it was for me.

Turns out that the income gap between the richest and poorest 20% of households is the third largest among U.S. cities — this based on data from the 2010 American Community Survey.

The average income for the richest fifth was 29 times greater than for the poorest fifth. Look only at the top 5% and the mutiple rises to 52.2% — $473,343, as compared to $9,062.

I know that conservatives generally don’t view income inequality as a problem. What matters, they say, is income mobility, i.e., the opportunity to move up the income scale.

But, to my mind, such enormous gaps should concern us — and for various reasons.

Some research indicates that severe income inequality is, in and of itself, bad for society.

Researchers at the University of York, for example, have found that people in countries with high income inequality — the U.S. among them — fare worse on a host of indicators, e.g., physical and mental health, violence and drug abuse, mutual trust and community cohesion.

The findings are controversial. Other explanations have been offered for what are, after all, only statistical correlations. Yet we surely see something like them at the local level.

The two cities Mayor Gray is rightly concerned about depress many measures of community well-being. And they’re fraught with cross-class hostilities — some more overt than others.

We also know — or surely should — that wealthy people have disproportionate political clout and, of course, use it to protect their own interests. The bigger the income gap, the more these interests are likely to diverge from those of people at the bottom of the income scale.

We need only look at the fate of some very reasonable tax reform proposals to see how this plays out — and to the detriment of residents who depend on our safety net programs.

But the biggest deal here is the very low average income for the bottom fifth of D.C. households — under 50% of the federal poverty line for a family of three. About $4,800 less than the yearly rent on a modest efficiency unit.

The rising tide that’s supposed to lift all boats hasn’t done much for these households. Since 1979, their inflation-adjusted wages have grown just 14%, while those for the high earners have grown 44%.

This reflects a nationwide trend. The Economic Policy Institute reports that the inflation-adjusted income for the top fifth of families grew 49% during about the same period as DCFPI carved out. For the bottom fifth, income actually shrank by 7.9%.

The problem, many analysts say, is that the top fifth — and even more the notorious top 1% — have been gaining ground at the expense of everyone else.

Explanations abound. Solutions also. President Obama is again campaigning on some. We’ll soon see a related, bigger bundle in Senator Tom Harkin’s Rebuild America Act.

DCFPI instead focuses on a handful of local policies and programs that could lift the incomes of our bottom fifth. With two limited exceptions, they’re already on the books. What’s not is sufficient funding.

Given the resources, the initiatives would:

  • Help residents prepare for living-wage jobs.
  • Address housing concerns, i.e., remedy the budget cuts to the District’s main affordable housing programs.
  • Make work pay better for a subset of current and future D.C. workers.

I’ll return to these in a separate post. Will say here only that DCFPI’s recommendations are — I assume deliberately — very modest.

But they could make a big difference for many of those very poor residents in the bottom fifth. A big difference for our divided community too.