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Thursday, February 20, 2014

The Richer the City the Greater the Inequality

Posted by on Thu, Feb 20, 2014 at 8:09 AM

Cities are, of course, the main generators of a nation's wealth...

...[T]his map built by Reddit user Alexandr Trubetskoy shows — in stark terms — how much of the country's economic activity (as measured by the gross domestic product) is focused in a remarkably small number of major cities.

But a recent study has shown that the most prosperous cities tend to have the greatest income inequality. Seattle is one of these cities..

The country’s big cities tend to have higher income inequality than the country as a whole. For instance, in the 50 biggest American cities in 2012, a high-income household — which the study measured at the 95th earnings percentile, putting it just into the top 5 percent — earned about 11 times as much as a low-income household, at the 20th percentile. Nationally, that ratio was 9 to 1.

The article opens by saying something that appears to be startling: If one wants to live in a more equal community, the place to go is a city whose economy is not growing. But this story lead is not as provocative as it sounds. To appreciate its substance one only has to look back to last week's popular posts and articles about how a black neighborhood in Portland rejected the convenience of a Trader Joe's grocery store precisely because many feared it would bring economic growth (or development), and this growth would attract the unstoppable forces of gentrification—a process that always leads to greater and greater income inequality in a neighborhood and, ultimately, a city.


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theophrastus 1
in order to have inequality you have to have piles of something imbalanced on one side. or said another way: if a city is poor there's nothing to be "inequal" with. we're verging on a statistical tautology here.
Posted by theophrastus on February 20, 2014 at 8:15 AM · Report this
Yes, the real solution here is to move to some midwestern shithole with no chances for success and incredibly inefficient living spaces. Fucking brilliant.

By the way, those places you advocate moving to have little or no mass transit to speak of. You have to drive everywhere.

Could you at least be consistent in your unsupported rantings?
Posted by Solk512 on February 20, 2014 at 8:20 AM · Report this
Banna 3
First: There is a lot that is not correct with this map, including the absence of several major cities and what appear to be misplaced locations. I think the guy's even admitted to leaving out data that didn't support his conclusion.

Second: Pet peeve # 208: Geographic profile maps which are basically just population maps.
Posted by Banna on February 20, 2014 at 8:22 AM · Report this
So basically, income equality leads to nobody having any money. Perhaps there is a lesson in this?
Posted by Ken Mehlman on February 20, 2014 at 8:38 AM · Report this
Worried about the stats. In the more equal cities, is the right tail truncated or is the whole pdf more centered or what?
Posted by wxPDX on February 20, 2014 at 8:46 AM · Report this

They also chase out artists...and art...preventing the Creative City from forming.

The two maps below show the location of independent and community-based (ie. non-commercial) cinema, visual arts, performance and live music (for elaboration on these definitions see our recent paper here) in 1991 and 2011.

The pattern they show is the pattern of gentrifying cities all over the world: low-yielding land uses get pushed into areas where land values are lower, as high-end residential and office buildings – the “highest and best” uses in most market economies – proliferate.…

Posted by Supreme Ruler Of The Universe http://_ on February 20, 2014 at 8:47 AM · Report this
lark 7
Good Morning Charles,
The only thing I have to comment on is that this last sentence sounds odd:

"To appreciate its substance one only has to look back to last week's popular posts and articles about how a black neighborhood in Portland rejected the convenience of a Trader Joe's grocery store precisely because many feared it would bring economic growth (or development), and this growth would attract the unstoppable forces of gentrification—a process that always leads to greater and greater income inequality in a neighborhood and, ultimately, a city."

I thought a city good and income inequality bad. My understanding is people flock to cities among other reasons precisely because of economic opportunites (jobs). Those there (that neighborhood in Portland) would also have benefits. What seems strange to me is that they would reject that for fear of gentrification.

It begs the question "Is gentrification necessarily not constructive to a city?" I thought it was. Isn't gentrification essentially "urban renewal"? I know it comes with a cost, the displacement of older working class neighborhoods usually dominated by a particular ethnic or racial group. But cities change. A more diverse city I believe will auger economic growth. At least, in theory.

For the record, I was surprised and not pleasantly by the headline "The Richer the City the Greater the Inequality".
I just didn't think that at all. However, I was quite startled by that last sentence. There's something very odd about a neighborhood "kicking out" an economic opportunity. To be sure there may other factors, but this is just my initial reaction.

Posted by lark on February 20, 2014 at 8:53 AM · Report this
This is a mathematical certainty. Prosperity brings inequality because the lower bound of income is fixed but the upper bound is not.
Posted by Sean P. on February 20, 2014 at 9:02 AM · Report this
The map is lame. Cities are where people are, so this should be overlaid with population. Prairie dogs work hard, but don't don't generate much income.
Posted by DOUG. on February 20, 2014 at 9:06 AM · Report this
raindrop 10
Wow. Look at all that inequality in progressive liberals in Malibu and LA.
Posted by raindrop on February 20, 2014 at 9:07 AM · Report this
lark 11
@8 Good point. Agree.
Posted by lark on February 20, 2014 at 9:11 AM · Report this
Matt the Engineer 12
Cities are productivity machines, and with increased productivity generally comes higher wages. That 11:1 in cities v. 9:1 overall isn't the full picture - I'll bet the 20th percentile in a city compared quite favorably to the 20th percentile elsewhere.

That said, there's no guarantee that higher productivity turns into higher wages, especially at the lower levels. Pay at lower levels is more a function of labor supply. A minimum wage, maximum salary, or income redistribution (income tax) would probably be needed to keep an inequality ratio low. My favorite is the income tax, using the proceeds for things the benefit the poor such as subsidized education and housing, but I'm open to other solutions.
Posted by Matt the Engineer on February 20, 2014 at 9:14 AM · Report this
@12 In your view, how much income inequality is too much?
Posted by Ken Mehlman on February 20, 2014 at 9:38 AM · Report this
thelyamhound 14
@2 - I realize that it's hard to extract a thesis from Mudede's prose (too much Foucault in his diet), but I'm pretty sure he's not advocating leaving the city. I think his real thesis--that high-density urban centers should resist growth and gentrification in order to preserve tribal identities--is nearly as misguided (I support the preservation of tribal identities, but think that can be accomplished without stifling growth or convenience), but it's still not what you seem to think it is.

@6 - With relatively few exceptions, small towns and suburbs have no avenues for new artistic works at all. So what do you propose? Cities that don't grow? A network of small towns that only support revivals of "classics"?

@Ken MehlmanI think that "income inequality" is a useful shorthand, but it's clearly confusing to rhetorically blunt literalists. "Equality" needn't--indeed, oughtn't--mean that everyone has equal income. That said, a working definition of "too much inequality" might read thus: A condition wherein the wealthiest citizens enjoy material comfort and control of the market to a degree that costs of food, rent, and utilities, along with the number of ostensible luxuries that become necessities for participation in the market, make living in the neighborhood or even the city in which the lowest percentile of full-time wage-earners work impossible.

I don't really care how much more anyone is earning than I am unless the cost of doing my job(s), getting to my job(s), or keeping myself healthy and motivated enough to continue doing my job(s) adds up to more than those jobs pay.
Posted by thelyamhound on February 20, 2014 at 10:02 AM · Report this
Fnarf 15
The idea behind this map is correct, but it is seriously inaccurate, as Banna @3 points out. The author himself has retracted it.

The message is also not quite as stark as the map suggests for another reason: the population is also highly concentrated in the orange areas.

The message that you can avoid income inequality by avoiding cities that aren't growing is ridiculous on the face of it. The reason the blue areas have low inequality is because everyone in them is poor. And by definition they can't absorb new people. The country has to absorb new people; it has to grow. The engine of that growth is cities -- GROWING cities. People flock to them for that reason, in every country in the world. That's why the world is so rapidly urbanizing; in Lagos or Rio de Janeiro or Chongqing or Turin or Seattle, moving to the city, even if it's in conditions that surburban white Americans find horrific, is always better than staying on the farm or village. That's where the future is.
Posted by Fnarf on February 20, 2014 at 10:04 AM · Report this
Sargon Bighorn 16
White people = Gentrification. Black people = fear of economic growth. Mr Mudede = Racism.
Posted by Sargon Bighorn on February 20, 2014 at 10:06 AM · Report this
Isn't that the way of the world since the very first cities?

My first week in NYC it was explained to me thusly: ten million people work for the City; the City works for ten thousand.

Same as it ever was.
Posted by RonK, Seattle on February 20, 2014 at 10:09 AM · Report this
Matt the Engineer 18
@13 I'd love to see a much larger middle class. Our large middle class drove our culture and prosperity in the past, ever since Ford employees were paid enough to buy Fords. In the past few decades the middle class has shrank as the rich became richer. Not that I think everyone should be middle class, you should have to work for it. But a middle class lifestyle should be available to everyone. Subsidized education is a key piece of this.
Posted by Matt the Engineer on February 20, 2014 at 10:50 AM · Report this
collectivism_sucks 19
This is bull on so many levels.

But most of all, because of this: a city with 20% poverty and 0% of really rich people gets developed more and in a decade or two it is 10% poor and 3% rich, the result of poor people getting better jobs and a few rich people moving in. On paper, it has higher income inequality than before despite having less poor people.

I read somewhere that Medina, WA has, on paper, VERY high income inequality...and, at the same time, very low poverty. Why? Bill Gates lives there, and next to people making "merely" $200,000 he is rich and they are "poor."

If you have a town with everyone comfortably upper-middle class and a few billionaires, that town will look, on paper, to have income inequality. When in reality, everyone is doing well but a few are doing VERY well.

Want equality? Check out Detroit: just about everyone is equally poor.

I'm reminded of a former Soviet citizen who wants said "socialism worked. We managed to distribute poverty equally among the people."
Posted by collectivism_sucks on February 20, 2014 at 11:48 AM · Report this
@14 What public policy choices do you think will ensure that average people can earn decent wages and enjoy a reasonable standard of living?

@18 Yeah, Germany has shown that, even in the age of globalization, a rich country can retain it's manufacturing base, if it makes the right kind of investment in human capital.

@19 Oh, do shut up.
Posted by Ken Mehlman on February 20, 2014 at 11:58 AM · Report this
keshmeshi 21
In other news, water is wet.


Yes. The lesson is that income redistribution is necessary for a functioning first world society. Thanks for asking.
Posted by keshmeshi on February 20, 2014 at 12:10 PM · Report this
yes! keep going cm!
Posted by carsten coolage on February 20, 2014 at 1:45 PM · Report this
Nice population map you've got there.

Woo hoo! Junk science Thursdays!
Posted by William F. Fuckley on February 20, 2014 at 1:55 PM · Report this
As someone who runs a small farm, I'd like to see how those cities that Charles loves so much, do when they have to be self-supporting.

Also, GDP is supposed to be based on "products". Last I checked, most "products" (as opposed to hedge funds, investment banking, social media - which mostly exists to sell "products", and so on.) were made in factories. Oddly, most of the large cities I've lived in (Manhattan, Boston, Los Angeles, Portland, Seattle) have a very negative view of factories and other forms of mass production.
Posted by randoma on February 20, 2014 at 2:35 PM · Report this
But a recent study has shown....

Fer fucks sake we need a recent study to tell us that? Henry George. 1879. Progress and Poverty.

Modern economists are almost caught up to late 19th Century thought. Congrats to all!
Posted by tacky on February 20, 2014 at 3:05 PM · Report this
Matt the Engineer 26
@24 Luckily, cities don't have to be self-supporting. Most farms take our money in exchange for food.

And "products" absolutely don't have to be physical things. My job like those of many/most in the city mostly creates intellectual products. I make drawings and specifications that help workers that do create things create them without wasting materials and time. That's real value whether or not you can weigh it.

One useful way of measuring how much someone produces - whether it's a concept or a thing you can touch - is by using money. The US has the highest GNP in the world, close to 3x as high as the second place China. But what country do you think produces more pounds of "product"? I'll give you a hint: 79% of what we produce is categorized as "Services". These services are real products. Whether or not you can touch them.
Posted by Matt the Engineer on February 20, 2014 at 4:22 PM · Report this
seandr 27
But a recent study has shown that the most prosperous cities tend to have the greatest income inequality.

Duh. Given that income has a natural lower bound of $0, income inequality can really increase if some people get richer.

In other news, studies show that cities with the tallest buildings tend to have the greatest elevation inequality.
Posted by seandr on February 20, 2014 at 4:38 PM · Report this
thelyamhound 28
@20 - I am not paid to make public policy; I'm paid to help people get in shape, to write lines for actors to say on stage, and to memorize lines and say them in compelling, convincing, and/or entertaining ways for a paying audience. If I had to take a stab at some things that might help, I'd say creating a scale of some sort whereby wages are tied to inflation and/or regional cost of living would seem to have some merit; I'm not opposed to rent control, or other forms of price control, if someone could elucidate for me how those really work.
Posted by thelyamhound on February 21, 2014 at 12:47 PM · Report this

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