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Why Income Inequality Is So Much Worse in Atlanta Than Omaha

Of all the forms of diversity inherent in big U.S. cities, there is inevitably vast diversity in incomes, too. New York City is home to investment bankers and busboys, San Francisco to Internet entrepreneurs and grocery clerks, Boston to biomed engineers and the janitors who pick up their offices.

So it's not surprising that all three cities have some of the widest income inequality at the local level in the U.S. The long tail of the top earners on the income spectrum stretches particularly far into the six figures.

But consider Atlanta, where the top 5 percent of households make considerably less than the top 5 percent in San Francisco. According to a new Brookings analysis out today, Atlanta actually has the worst inequality of the 50 largest U.S. cities when we compare the city's (relative) super-rich to the bottom fifth of all households. That distinction seems surprising for a city without the world-class concentration of tech start-ups or financial firms or medical companies of some of the coastal metros.

In Atlanta, though, it turns out inequality is as much driven by what's going on at the bottom as at the top.

This chart from the Brookings paper, by Alan Berube, shows the incomes for the top 5 percent and bottom 20 percent of households in the cities with the lowest and highest inequality between the two groups:

The top 5 percent of households in San Francisco make more than $353,000 a year. In Atlanta, it's about $280,000. But the bottom 20 percent? In San Francisco that income cutoff is $21,313. In Atlanta, that figure is about $6,500 a year less. Sure, San Francisco has all those high-paid Google workers (although they may work outside the city). But it also has a minimum wage of $10.55 an hour, the highest guaranteed income for low-wage workers in the country. Atlanta, Baltimore, and Miami also have particularly high poverty rates, pulling down the incomes of the bottom 20 percent (this is much less true of Virginia Beach and Raleigh).

Obviously, San Francisco is still right up there near the top of the list of America's most unequal cities. But the contrast between that tech hub – where inequality has become a bitter political issue – and Atlanta illustrates that different dynamics are pushing the top and bottom apart in America's largest cities, depending on where you look.

Urban inequality in the U.S. has grown as a political issue, in part thanks to newly empowered voices like New York Mayor Bill de Blasio. But it hasn't grown substantially worse over the last few years, Berube notes. "While inequality in cities is somewhat worse today than before the Great Recession," he writes, "the trend is neither profound nor uniform."

America's largest cities have long had wider inequality than the country as a whole, in large part because the rich households in big cities tend to be richer than the national average and the poor households simultaneously poorer. But inequality doesn't look the same across each of those cities. Via Berube:

Nor are all unequal cities created equally. For example, compare San Francisco and Miami, which have similar 95/20 ratios. San Francisco’s ratio is high because its wealthy households have very high incomes, considerably higher than in any other major city ($353,000 at the 95th percentile). Miami’s ratio is high primarily because its poor households have very low incomes, third-lowest among the 50 largest cities ($10,000 at the 20th percentile). Miami has a lot of very poor residents and neighborhoods, but manages to retain several very wealthy enclaves. In San Francisco, skyrocketing housing costs may increasingly preclude low-income residents from living in the city altogether.

Miami actually has a comparable top income to Omaha in the above chart. But while Miami ranks third on Brookings' list, Omaha ranks 43rd. That's because because the bottom incomes in the Nebraska city are much higher. The more equal cities among the top 50 look relatively similar to Omaha: They're clustered in the South and West, they're geographically more expansive, encompassing outlying communities that would count as suburbs in Boston or San Francisco. And they lack the humming economic engines of tech or finance that are drawing high-wage workers to places like San Francisco and New York.

Brookings' focus on the ratio between the top 5 percent and the bottom 20 percent is just one way to slice inequality. And these 2012 Census numbers derive from cities, not metropolitan areas, so they may leave out the poor who are increasingly pushed to the suburbs. But Berube's underlying point is important both for local officials trying to curb inequality and for a national debate that often describes the problem as if it were a uniform one: "the contemporary causes and consequences of inequality in cities," he writes, "vary greatly across the national map."

Emily Badger is a former staff writer at The Atlantic Cities based in Washington, D.C. She now writes for The Washington Post. All posts »

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