ISEA Income Wealth Report
Bubble, Bubble, Toil and Trouble: Characteristics of Income Distribution across the United States after the Great Recession
ZIP-code level analysis reveals where being middle class feels rich or poor – and where in the U.S. it feels more like a developing country
Map 1: Where the rich (gold) and the poor (purple) live
The Institute for Spatial Economic Analysis at the University of Redlands released a report that analyzes income distribution across U.S. zip codes. The great recession has brought substantial changes in wealth and income distribution to U.S. households. The researchers note that while they expected to see differences in where the rich and poor live, they were surprised by how stark this geographic divide is: the rich and the poor live geographically separated lives. They summarize their findings as follows:
(1) The highest 10 percent of income earners live in cities, while households below the poverty line live in the countryside and in some inner city agglomerations (map 1 above).
(2) The concentration of high income earners in cities makes many city neighborhoods quite homogeneous: again, the rich only live with the rich. Income inequality within cities tends to be lower than in the countryside (map 2 below).
(3) The highest 30% income owners concentrate in cities so much that city household dwellers earning the U.S. median income fall into the lowest 30% of income earners locally in these cities. In other words, while a household earning the median income in the U.S. is by definition of the median poorer (and at the same time richer) than 50% of the households in the U.S., in its local zip-code more than 70% of households earn a higher income. Thus, city dwellers earning the U.S. median income have every reason to feel poor (map 3 below).
(4) Many middle income earners seem to avoid cities. Instead, they locate themselves evenly distributed in the countryside. Upper middle income households can be found in suburbs, while lower middle income households can be found in less affluent city areas, well separated from affluent neighborhoods.
The data suggest analyzing the U.S. as two economic – and social – entities: affluent large cities versus the less well-off areas outside these cities. Consequently, policy analysis and prescriptions should at least separately address the existence of these two entities within the U.S.
Their analysis differs in three ways from previous efforts and reports issued by the Census in February 2012 (http://www.census.gov/prod/2012pubs/acsbr10-18.pdf). First, they use year 2013 estimates (forecasts) instead of historical data. Second, they proceed with their analysis on the ZIP-code level, which helps them unmask otherwise hard-to-see separation. Third, they order and sort U.S. households into ten equally sized groups (deciles) and provide analysis separately for each group.
The full study together with additional high-resolution maps for the entire U.S., California as well as Southern California and an animation are available at http://isea.redlands.edu/ .
Commentary from University of Redlands experts:
- “At least in terms of living locations, it seems that the rich are geographically walled off from the rest of America.”
- "Is the American dream outside the grasp of the middle class and poor?"
- “You have to be rich if you want to feel like living a middle class life in the cities”
- “In terms of income inequality, there are geographic areas in the US where the data looks more like a developing country than like the richest country in the world.”
- “If today’s income determines today’s educational quality, we are likely cementing regional disparity for generations to come."
Switzerland or Swaziland: income inequality within US ZIP codes
Map 2: Where local income inequality feels more like a developed (green) or a developing country (orange)
Where earning the middle (median) income feels rich – or poor
Map 3: Where the US median income may feel rich (green) or poor (red)
The University of Redlands’ Institute for Spatial Economic Analysis (ISEA) offers science and research based spatial analysis and forecasts of economic phenomena. ISEA serves regional, national and global communities in their needs to better understand how socio-economic phenomena affect and are affected by their communities and the space they live in. More information and previous ISEA publications can be found at http://isea.redlands.edu/. You can follow ISEA on twitter @iseaRedlands.
The Banta Center for Business, Ethics and Society is a forum for the examination of ethical issues in corporate and professional life. It seeks to advance our awareness of ethical problems and to improve our ability to make ethical decisions by engaging in dialogue and instruction with practitioners and scholars from a broad range of fields and disciplines. In accord with the University of Redlands mission of diversity, innovative instruction, academic rigor and civic responsibility, the Banta Center offers programming that recognizes ethics as the foundation for individual and organizational excellence.