City Has Fastest-Growing Income Inequality

New Haven made a top ten list — of cities with the widest gaps between rich and poor.

Our city landed sixth in a new Brookings Institution study of cities where the greatest gaps exist between households with annual incomes in the 95th and 20th percentiles. The difference was between $187,984 and $12,293 in 2014, the year on which the study was based. Those top earners earned 15.3 times the income of the lower earners.

And we landed at the top — numero uno —in a ranking of how fast the income-inequaity gap has widened since the Great Recession.

New Haven County ranked ninth in the rankings of metro areas with the widest gaps. Greater Bridgeport — which includes the city of Bridgeport and hedge fund-billionaire-populated lower Fairfield County — topped the list, ahead of even greater New York City and the Bay Area.

Read the full Brookings income inequality study here.

Natalie Holmes, who coauthored the study with Alan Berube, said in an interview with WNHH radio’s “Dateline New Haven” program that they chose the 95th percentile because that represents the bottom rung of the very top earners, while the 20th percentile represented the top of the low-wage sector.

She said that in New Haven, as in cities across the country, the plummeting in purchasing power of lower incomes drove the widening of the gap more than the increase in top salaries did. As mentioned often on the current presidential campaign trail, working people have been seeing their inflation-adjusted salaries dropping or else failing to keep ground with the overall uptick in the economy during the recovery from the Great Recession.

That problem — of falling wages — was more severe in New Haven than in any other city in the nation. The Brookings report found that the 20th percentile of family earners saw their real wages plummet 31 percent (that’s not a typo) from 2007 to 2014; the top 95 percentile in town (a much smaller group) saw wages rise 24 percent. That produced an overall 6.7 percent change in the equality gap, higher by far than in any other city in the country.

Overall, though, “it is consistent with trends we are seeing across the country,” Holmes, a 2010 Yale grad, said in the interview.

The report found that cities with the greatest income inequality also had some of the highest housing costs. “This is not a causal statement at all,” Holmes said. But “in more unequal places, it may be pulling up the cost of housing.”

“To be sure, many low-income households receive housing subsidies that reduce their rental cost burdens. Yet local inequality may serve to raise the price governments pay for those subsidies (e.g., for vouchers that cover the difference between “fair market rents” and 30 percent of household income). And for the majority of eligible low-income households who do not receive such subsidies, higher private market rents can pose serious financial challenges,” Berube and Holmes write in the report.

What Is To Be Done?

Travis Carbonella Photo “Inequality is most often a function of economic forces acting not at the city scale alone, but at the wider metropolitan scale. This is evident in the strong relationship that exists between levels and changes in income inequality over time in cities and the metro areas they anchor. Thus, comprehensive strategies to address the effects of gaps between rich and poor households should engage regional, as well as local, actors and institutions around issues such as education and workforce development, transportation, and even minimum and living wages,” Berube and Holmes write.

In general, states enact minimum-wage raises, not cities (though some, like Seattle, have done so).

Still, officials and activists in New Haven are pursuing city-focused strategies to raise incomes.

A local activist group called New Haven Rising has been organizing rallies and calling on major employers to address the problem, which it casts as a “jobs crisis.” New Haven Rising and Yale’s unions, with which it is affiliated, negotiated a deal last month with Yale in which the university pledged to hire 1,000 people from lower-income New Haven neighborhoods over the next three years. This week it issued a report calling on Yale-New Haven Hospital to make a similar commitment.

Yale and the hospital worked with Yale’s unions and city political and business leaders to launch New Haven Works, which is helping unemployed and underemployed city residents land living-wage jobs.

Paul Bass Photo City Economic Development Administrator Matthew Nemerson suggested that broadening the focus on a larger pot of potential job-creation money: the services major institutions purchase.

“I understand the focus on the next 500 people or the next 1,000 people at Yale,” Nemerson said in an interview. “These anchor institutions are [also] spending billions of dollars. One of the most important economic development things we can do is look at Yale and Yale-New Haven Hospital and get a larger percentage of what they buy [to be purchased locally].

“That’s one of the things that are really changing about America. It’s not globalization. It’s hyper-regionalization.” You can buy food for Yale from a distribution service in Pennsylvania.”

Nemerson, who had read the Brookings report, noted that regions with strong tech sectors — which tend to pay higher wages — in general fared better than New Haven. He said the city has focused on growing those kinds of jobs, which in turn spin off high “multipliers,” or support jobs. A new tech hub is being planned, for instance, at a former state bus depot at 470 James St. (he project is expected to reach a milestone this week, when the State Bonding Commission votes on whether to approve $5.5 million for an environmental clean-up of the property.)

In addition, the Harp administration has helped 70 New Haveners launch enterprises through a new Small Business Academy (as its director, Jackie James, discussed last week in a WNHH interview).

 

Click on or download the above sound file to hear Brookings’ Holmes discuss the study and the broader issue on “Dateline New Haven.” Or subscribe to WNHH’s new podcast “Dateline New Haven,” where episodes of the show will be delivered directly to your phone or smart device. (Click here for details on how to subscribe.)

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posted by: anonymous on January 28, 2016  3:57pm

Basically, places like New Haven and Boston are working on “catching up” to the much-worse levels of inequality that are already seen in super-rich areas like Fairfield County, New York City, and San Francisco.

This is a major issue, but at the current rate of change, it is going to take a while before New Haven in any way approaches the levels of inequality that are already experienced in those regions.  The “top 5%” in Greater New Haven make $222K per year - way less than the $559K in Fairfield County, or the nearly $400K in the San Francisco area.  Low income workers in those areas make slightly more, on average, but housing costs there are at least twice what they are in New Haven.

The question for New Haven is how to respond to this national trend.  Should we continue to block new housing construction downtown, so that our housing costs will eventually rise to the levels already seen in Fairfield County, NYC, and San Francisco?

posted by: HewNaven on January 28, 2016  4:58pm

Definitely #gscia

posted by: THREEFIFTHS on January 28, 2016  5:52pm

Go back and read the The famous Citigroup memo for 2006.

The U.S.,UK, and Canada are the key Plutonomies - economies controlled by
the wealthy.

posted by: anonymous on January 28, 2016  6:00pm

Hew: If you want a place where the wealthy and poor live in completely different towns, then New Haven is definitely not #GSCIA.

The lowest income inequality of any town in our area is Bethany - it has about as many rich people as New Haven, but almost no poor people.  It looks like Iceland - very low inequality!

On the flip side, you have the City of Hartford - very few wealthy people still in the city, but a much larger group of residents with low incomes than New Haven.  Also lower inequality, at the city level.

Places like San Francisco, Boston, New Haven, NYC, Washington DC, LA, tend to top lists like these because both wealthy and poor residents still live in relatively close proximity to each other, and share the same Mayor, city council, etc.  Not perfect by any stretch of the imagination—but in the rest of the United States, you increasingly have homogeneous “gated communities” with very little income inequality, statistically speaking.

posted by: Christopher Schaefer on January 28, 2016  8:00pm

How ironic that it was almost exactly 2 years ago that our Rep. Rosa DeLauro made a video about the ‘Existential Threat’ of income inequality: http://www.cnsnews.com/news/article/eric-scheiner/millionaire-congresswoman-income-inequality-existential-threat-us#sthash.23obxNEW.uxfs

posted by: robn on January 28, 2016  9:25pm

Logical problems with this report. It’s stating the obvious to say that wealthy people make more than poor people. It’s also quite obvious and a mathematical inevitability that comparing the bottom 20% to the top 5% is going to exaggerate the difference. Looking at the source data it shows that New Haven isn’t so much of an outlier with a 15:1 ratio because of the 97 cities analysed, the majority of them sit between an 8-11:1 ratio. The Brookings report implies that wealth is the cause of poverty but fails to discuss that poor people will tend to gravitate toward urban centers for social services because they’re seldom offered elsewhere. Pretty bush league propaganda; the kind that feeds into the unfortunately common New Haven paranoia and rejection of capital influx (the thing that creates jobs).

posted by: wendy1 on January 29, 2016  9:23am

It’s time for wages to go up and the wealthy to share not hoard their $$ which will lose it’s value if and when we develop hyperinflation.  There are plenty of hoarders here with Yale Corp. at the head of the list.  Our best hope for political, economic, and social change is the old man from Vermont.  Tomorrow at 3PM there will be a march from Union Square to Zucotti Park (NYC) supporting him as IOWA primary is Monday.  Millenials , Gen-Xer’s, and Boomers, I urge you to fight for justice.

posted by: Adelaide on January 29, 2016  9:29am

70 businesses is nothing. It will take months for any business to get it to the point of success, that is IF it can keep the doors open that long.
Then let’s see how they are doing a year from now, 2 years from now.
To herald 70 business does nothing for the city. Taxing Yale does.

posted by: Wikus van de Merwe on January 29, 2016  9:52am

Nobody “hoards” wealth.  Nobody sleeps on a big pile of gold coins at night.  They invest it.  Those investments create jobs.  If you want more jobs in NH you could do a few things:

-Make NH a place people want to invest in.  Stop killing development projects.  There are lots of very smart and well intentioned people in NH.  If it was possible to develop a profitable housing project that met all the ludicrous social equity demands the board of alders wishes for then by now someone would have stepped up and created a non-profit or B corp to do so.  Let NH be developed.

- Stop trying to increase the labor pool.  Contrary to the misguided thinking of some, 1 person moving to the city doesn’t create 1+ jobs.  If you invite 15,000 low skill workers to come live in your city, you can’t pretend to be perplexed when the 15,000 low skill workers who were here before that can’t find work.  People will naturally move to where there is work.  By creating an artificial incentive for people to move to NH you’ve upset that natural balance.

-Acknowledge that NH is a place where people move to when they don’t have jobs.  If everyone in New Haven County who can’t afford to live, moves to NH because it’s the cheapest.  NH will perpetually have higher unemployment.  If you just address NH then you’re trying to stop a sinking ship with a bucket.  Addressing the entire county would be optimal, but this is exactly why county government was dissolved (concentrate poor in the cities, and allow the suburbs to get fat off them.  Ironically if the cities would allow gentrification maybe this could create momentum for the restoration of municipal government).

posted by: Noteworthy on January 29, 2016  10:17am

Meanwhile, Back at the Ranch Notes:

This is a problem because those at the lower end of the economic scale always tax the system more in terms of services and support. How can we create more income at the bottom? By encouraging small business development, expansion and growth. Over at the Economic Development Office - they are hatching schemes in secret to severely hurt small business and most definitely thwart any idea of expansion when it comes to food carts/trucks. This is pretty duplicitous.

posted by: A.T. on January 29, 2016  10:26am

The close physical proximity of East Rock to Newhallville is the most startling of the example of disparity to me. It’s two completely different worlds all within a tiny geographical area.

posted by: Wikus van de Merwe on January 29, 2016  10:56am

Also important to note is that the policies of the city disproportionately incentivize people at the low end of income spectrum to move to New Haven. 

This isn’t a revelation about a growing disparity due to a nefarious plutocratic system, it’s a revelation that “Hey, when we ask lots of poor people to move to our city, we have more poor people in the city”.

posted by: robn on January 29, 2016  11:22am

Here’s another two way to look at the data straight off of census charts for 2014.

The wealthiest 27% of New Haven households earned $75K or more. The poorest 23% earned $25K or less. That’s a 3:1 earning ratio.

The wealthiest 3.3% of New Haven households earned $200K or more. The poorest 13.9% earned $10K or less. That’s a 20:1 earning ratio.

The wealthiest 25% of Greenwich households earned $200K or more. The poorest 22% earned $35K or less. That’s a 6:1 earning ratio (although many of the top earners far exceed $200K so the ratio is actually far greater. The census figures don’t go into finer percentages than this)

It’s all in how you look at it. Bottom line is that high and low are two different things. I think its a far more valid effort to describe the real wage vs COLA reduction for working poor over the past three decades.

http://www.census.gov/acs/www/data/data-tables-and-tools/data-profiles/2014/

posted by: Arnie Pritchard on January 29, 2016  11:43am

Striking numbers from the first table:

1. 20th percentile - in the metro area, down a little more than $4,400.  In the city, down a little less than $3,800.  Trend similar, bad, and slightly worse in the metro area overall all than in the the city. 

2. 95th percentile - In the metro area, DOWN by a little more than $6,700.  In the city, UP by almost $45,000 - by far the biggest increase of any city in the chart, (though not of any metro area) and a trend sharply different from the rest of the metro area.  So who the heck are these people who have hit it big in the city?  It can’t be just one or two fabulously wealthy people - that might pull the average up a lot, but it would have little impact on a rating based on percentiles. Those at the 95th percentile or above for the city would be about 6,000 people, and that group as a whole would have to be doing pretty well.

posted by: robn on January 29, 2016  12:48pm

AP,

Recent census data shows that the top 4.9% of New Haven households (which on the low end of that scale can and likely do include more than one earner) earn $200K or more. This is listed as 1258 households out of 25,775. If you pretend for a second that all 1258 households earned $200K, a change of 70 (6%) of those earners to $1M would add @$45,000 to the overall average earning…so large capital gains (where the wealthy tend to make their money) for a small percentage of earners really can swing the averages.

posted by: RobotShlomo on January 29, 2016  1:23pm

We’re…


number…

 

...1??? (Shrug)

posted by: anonymous on January 29, 2016  1:43pm

Robn and AP:

Also consider that for a small city like New Haven, the margins of error on Census American Community Survey household income data at the 95th percentile are probably very high.  The American Community Survey only surveys about 3 million people a year in the whole United States.

For example:

http://factfinder.census.gov/bkmk/table/1.0/en/ACS/14_1YR/B19081/1600000US0952000
Mean Household Income by Quintile and Top 5 Percent

2014 Top 5 Percent, City of New Haven: $299,769, Margin of Error +/- $44,298

2007 Top 5 Percent, City of New Haven: $209,271, Margin of Error +/-$ 26,363

(note: These are from the same source listed in the Brookings figure, but this particular table looks at the average household income of the top 5% as a whole, not the “cut off”, which is why the figures here would look higher for the top 5% and lower for the bottom 20%... the point about very large margins of error still applies, though).

So - while the incomes of the top 5% have certainly gone up in New Haven, the exact magnitude of the increase in New Haven is likely not statistically different from some of the other cities shown on that list. 

In other words, be wary of anyone who claims that New Haven is exceptional in the 95/20 increase, given that, in reality, we may be statistically tied with at least a few of those other cities given the imprecision of one year of ACS data.

posted by: HewNaven on January 29, 2016  4:43pm

I think it might be relevant that Salovey just spoke about the balance of “Big Data vs. the Human Touch” while in Davos.

The human side of big data
On Friday, Salovey led a panel on “Big Data vs. the Human Touch” as part of the official program at the World Economic Forum. The discussion centered on the increasing use of big data to inform decisions and the tradeoff in moving away from human decision-making toward a data-driven world. The panelists were Nancy Lublin, founder and CEO of Crisis Text Line, a nationwide text line for teens; Bo Lu, co-founder and CEO of FutureAdvisor, which offers personalized data-driven investment advice; and John Sargent, co-founder of Broadreach, which provides data-driven metrics to complex healthcare issues.

In his remarks, Salovey discussed some of the university’s initiatives using big data, such as those in the Yale School of Medicine, the Yale Center for Teaching and Learning, and insights from centers such as the Yale Center for Emotional Intelligence.

Yale’s approach to big data, Salovey told YaleNews, is to illuminate, rather than obscure the individual, adding that it is “all too easy to miss the individual at the center of the data.”

posted by: FacChec on January 29, 2016  4:57pm

I can’t fathom or follow the Brookings analysis of the 2014 American community survey data for the city of New Haven.

However, the 2014 Census American Community Survey (ACS) is linked here for a much more clearly factual analysis for your review. I for one do not agree NH is one of the fastest growing income inequality cities; it always was highly unequal according to 2000 and 2010 Census data.

http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF

Nemerson does not support the development of small businesses in New Haven in general; and definitely not in support of economic development in communities like Newhallville, Dixwell Dwight and the Hill.
Consider this: When his EDC department allocates less than 100k in CDBG special funds to aid small business Development and at the same time borrow $350K as a belated move gift to Bender& Bender, of Grand Ave and East St. that’s proof enough of his intent.

posted by: Bradley on January 29, 2016  7:37pm

Part of the explanation for New Haven’s relative inequality is historical. In the 19th and 20th century, most American cities annexed their equivalents of Hamden, North Haven, etc.  as the middle class moved outwards. In Connecticut, annexation was virtually unknown (New Haven’s annexation of a small part of East Haven is a minor counter-example). As a result, Connecticut’s cities were left with a large poor/working class population and a small well-to-do population.

This is only a partial explanation and does not account for the recent trend of heightened inequality at the city or regional level. I think it would be useful for the NHI/WNHH to host a discussion on what can be done to prevent the fuether bifurcation of New Haven and the region into rich and poor worlds.

posted by: HewNaven on January 30, 2016  1:55pm

I just read that WENDY1 donated $100,000 to a local free breakfast program. These are the kinds of generous acts that New Haven needs.

http://www.nhregister.com/general-news/20160129/sunrise-surprise-advocate-makes-100000-donation-to-free-breakfast-program-in-new-haven


I’m not saying a single donation is going to save NHV, but it’s incredibly MORE GENEROUS than what any developer has to offer us. An investment opportunity, as all private development projects are, cannot be seen as an “altruistic” act or even a “generous” one. Developers are simply PLACING BETS on our city. And, there’s nothing new about gambling! If you’ve got some extra money to play with, why not? Just don’t make them out to be heroes.

posted by: KateW on January 30, 2016  6:03pm

Wilkus - I totally disagree with your statement - “nobody hoards money” and your statement as if it were fact that “they invest it and that creates jobs”.  What century are you living in?  Many rich people, who are so clever, are not necessarily investing their money in sustainable jobs that would help save the environment, contribute to peace on earth, production of healthy food, or discovery of nature’s secrets that we are just beginning to understand.  Many are going after the fastest or most reliable buck they can find no matter what havoc that corporation may be wreaking on the planet or the block they are vying for building cheap shoddy toxic monoliths that further diminish the public realm. The hoarders amassing their paper tiger money do not necessarily care about creating living conditions for the health and safety of the lowliest among us including the elderly..  They just want to sit on top of their big fat pile of money and live in envy of those that have more than they do.  Their children are not necessarily happy or productive. They may not have the highest of moral character, and their idea of whats good for New Haven may just perpetuate the disparities and disenfranchisement of the majority.

posted by: Christopher Schaefer on January 30, 2016  7:24pm

KateW says “The hoarders…may not have the highest of moral character, and their idea of what’s good for New Haven may just perpetuate the disparities and disenfranchisement of the majority.” You just described careerist politicians—of both political parties—and why we need term limits.

posted by: Wikus van de Merwe on January 31, 2016  6:35am

So investing in things that don’t take a lessened/negative return in favor of social justice is “hoarding”?  OK then I guess the entire world “hoards” their money. 

Are you union?  Why don’t we “invest” the city union pensions in social justice and adjust payouts accordingly… yeah, I didn’t think so.

posted by: robn on January 31, 2016  8:32am

HN, 

The Reg article wasn’t very clear. Do you know if W1’s gift was raised money or her own? Where did that kind of money come from?

posted by: wendy1 on January 31, 2016  10:33am

Robyn——I have not ever been able to raise a dime from any of New Havens multi-millionaires nor did I get any response from any of Yale Corp. Trustees (20 of them).  I have actually asked Rosa DeLauro (24 million) and Rick Blumenthal (86 million) for big $$ to help New Haven’s homeless.  This was done in the flesh at Wooster Square’s “Cherry Blossom Festival” by me.  Blumenthal no longer goes.  And Rosa got really pissed.  These rich white people make me mad. 
The money I m giving away was from my grandmother who fought for human rights (black, gay, women, you name it).  The rich should share.  Money is a TOOL not a GOAL.  Hoarding $$ in these times is a sin.  I avoided debt, never had children (tubes tied in Harlem in 1973), and saw big trouble in the 60’s when all the good guys got assassinated.  Spike Lee said “Do the Right Thing” and that’s what I want to do.  I don’t want diamonds, gold, more houses; I want justice.  Ralph Nader said there is nothing more fun than fighting for social justice.

posted by: robn on January 31, 2016  1:52pm

WENDY1

That’s incredibly generous of you. I think if most people didn’t think that one trip to the hospital for a catastrophic incident could potentially make them homeless also, they might follow suit.

posted by: Walt on January 31, 2016  4:43pm

I   While I usually did not share his(?)  views,  I miss 2/3’s comments

He seems to be missing

What is up,.Paul ? 

Thought he had a copyright re “gentrification ”  on NHI   but now someone else occasionally uses it

[Editor: I ran into 3/5 the other day. He said he’s planning to come back full force but has been preoccupied with other matters later. I hope he returns soon!]

posted by: Walt on January 31, 2016  4:53pm

Re :my previous post

Had not seen a post from 2/3 in weeks.  Did not realize there was one before mine on this topic,

Bless you ,  Wendy

posted by: Sagimore on January 31, 2016  7:51pm

Inequality is not cause and effect. You can take more in taxes but its not working it doesnt create better paying jobs, the middle class today still might have a house and two cars. But they have no room for error. Maybe if the state brought in companys that pay a living wage instead of bleeding them out we could get more people working. Pratt and Sikorski are next, its just a matter of time now.

posted by: westville man on January 31, 2016  9:32pm

Walt, Misstating 3/5ths name once is a mistake. Doing it a second time is disrespectful.

posted by: Walt on January 31, 2016  11:29pm

3/5

Apologies if my error disturbed you

Did it a couple of years ago,  too, and was chastised by Paul .  He explained historical significance of your name then,  which was news to me..  No offense meant.

Will try to avoid in future

Sorry,  error again,  despite Westville’‘s claim

Walt


/////////////////
Paul

If anything above is offensive , please edit out.

Thanks

Walt

posted by: RichTherrn on February 1, 2016  5:40pm

@Wendy1, just wanted to add my admiration at your “putting your money where your mouth is”. God bless you!