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Income inequality gap in D.C. one of nation’s widest

By Carol Morello,March 08, 2012

The District has one of the highest levels of income inequality among the nation’s cities, with the top fifth earning on average 29 times the income of the bottom fifth.

Only Atlanta and Boston showed higher levels of income inequality in 2010, according to an analysis of census data by the DC Fiscal Policy Institute.

Driving the gap is the enormous gulf between a sliver of top earners and a mass of households with paltry incomes. According to the analysis, the top 5 percent of households in the District averaged $473,000 a year, far above the $292,000 averaged by their counterparts in other large cities.

The inequality remains large farther down the income scale. The city’s top fifth of all households pulled in $259,000 on average.

In contrast, the bottom fifth had an average income of $9,100, close to the norm for low earners in big cities.

The institute’s report, to be issued Thursday, said the dichotomy was the result of two vastly different economies in the District. One is populated by college graduates thriving in well-paying information and government jobs. The other is for people lacking higher education, scrambling for even low-paying work.

“In some ways, it’s a sign of what a vital, attractive city this is,” said Ed Lazere, executive director of the institute. “But that means the job market is really hard for anyone who doesn’t have advanced skills.”

The gap in income levels in the District is particularly striking in comparison to the region as a whole.

In census figures released last fall, the region has one of the lowest levels of income equality of any metropolitan area in the country. It also has the lowest poverty rate.

But in the District, the extremes have only grown with time.

According to the report, the median wage for District residents with a high school diploma, about $14 an hour, has increased 1 percent over the last 30 years, adjusting for inflation. The median wage of college graduates, about $30 per hour, is up 30 percent during the same time frame.

D.C. Council member Michael A. Brown (I-At Large) noted that when he attended Shepherd Elementary School in the late 1970s, the public school system was educating 125,000 more children than today.

“It means we lost families, most of them middle class or working class families,” he said.

Brown said the reports point to the need for more affordable housing, jobs programs, community college programs and restoring the safety net.

“We will try to figure out responsible revenue enhancements to restore cuts made in the last several years,” said Brown, one of the chief sponsors of tax increases on people earning more than $350,000.

Mayor Vincent C. Gray (D) also pointed to the need for more job training and education.

“We are working to ensure that every District resident gets a hand up rather than a handout,” Gray said in a statement. “Through programs like ‘One City, One Hire,’ targeted on-the-job training, and a renewed focus on reforming and improving our educational system from birth through postsecondary education, we are providing new tools to help move our most disadvantaged residents out of poverty and into the prosperity that the rest of our city enjoys.”

Peter Tatian, who studies the District for the Urban Institute, said the large number of new, young residents in the city could help even out the inequality.

“The question is whether they’re going to become a more permanent part of the city,” Tatian said, “which might change the overall picture so you don’t have so much of the extremes.”