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Concentration of 10% highest income earners, and below poverty line households

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THE USA AS A TALE OF TWO COUNTRIES:
The Rich and the Poor

ZIP code-level analysis reveals that the rich and the poor rarely live in the same locations

Carlo Carrascoso—faculty fellow, Banta Center for Business, Ethics and Society and Johannes Moeniusdirector, Institute for Spatial Economic Analysis

Recent discourse about income inequality has been a hot-button issue for many Americans. The Congressional Budget Office (CBO) released a report in October 2011 that showed that while the average American household income rose by 62% between 1979 and 2007, income growth for the top 1% of households was more than 15 times the income growth for the bottom 20%. Thus, the Occupy movements do not come as a surprise to many observers. But why did it take some time for people to rise up in protest?

Separate lives

Part of the answer may simply lie in the geography of income distribution: where the rich live, the poor can rarely afford to live. The rich and poor live geographically separated lives. A new map released by the Institute of Spatial Economic Analysis in cooperation with the Banta Center for Business, Ethics and Society at the University of Redlands reveals that rarely one will find higher than average concentrations of rich (in this study defined as the top 10% income earners by household) and poor (defined as households living below the federal poverty line) in the same ZIP code. Less than 1% of all ZIP codes fall within this category (as represented by the color red on the map.)Where they exist, they tend to congregate around regions where the top 10% are more concentrated, specifically inner-city developments that are proximate to richer suburban areas.

Buffer zones

Probably the most striking feature of the map is the existence of "buffer zones"—zones that tended to separate the rich from the poor. These light-grey colored zones frequently cover suburbia where middle-income households (defined in this study as neither in the top 10% nor living below the poverty line) dominate. Most of these buffer zones were geographically located in the Midwest of the country and comprise about 30% of all ZIP codes. With the shrinking of the American middle-class, the area of these zones may shrink even more.

Where do the rich live?

Cities are engines of growth, and not surprisingly, many high income earners live in cities. To capture this feature in their map, the researchers presented highly populated places (more than 500 people per square mile) in solid colors and those in less populated places in translucent colors. As expected, higher income earners are concentrated in cities. ZIP codes where the top 10% of income earners exceed 10% of the population represent 17% of all ZIP codes and are concentrated in big urban metro areas such as the Southern California/Greater Los Angeles region, the Northern California/Bay area region, the DC/New York City/ Boston Corridor, the Greater Chicago area, the Greater Minnesota area, the Greater Denver area, the Greater Houston and Dallas areas, and the Greater Atlanta area. There are almost twice as many ZIP codes where the Top 10% income earners comprise more than 15% of the population (the dark yellow zones) as there are ZIP codes where the Top 10% income earners are between 10% to 15% of the population (the yellow zones).

Where do the poor live?

Since the researchers had no direct data on poverty levels by ZIP code, they approximated it using data on average family size and prevalence of income levels. According to this approximation, surprisingly, poverty is geographically dominant in the United States, with 53% of ZIP codes having above average levels of poverty. Regions where the percentage of households with incomes below the poverty line is between 13.0% and 19.5% (the purple zones) comprise 28% of all ZIP codes. Regions where the percentage of households with incomes below the poverty line exceeding 19.5% (the purple blue zones) represent 25% of all ZIP codes and include almost all of the southern states, New Mexico, the Dakotas as well as urban inner-city areas. Within these regions, more than 1 in 4 (27%) of households live below the poverty line.

California

California stands out in the map, not only because of its large zones with high income earners and concentrated areas with large shares of households below the poverty line. It also features almost no buffer zones—these were replaced with neighboring areas with low population densities where either the share of high income households or households below the poverty line are more prevalent than their expected values.

(Maps for California and Southern California counties are available at http://isea.redlands.edu)

Researcher contact information:
Carlo Carrascoso
carlo_carrascoso@redlands.edu
202-684-8140


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