Thursday, September 24, 2015

Wage Inequality Across US Metropolitan Areas

Some US urban areas in their level of wage inequality, and in how the level of wage inequality has been changing over time. J. Chris Cunningham provides some data in "Measuring wage inequality within and across U.S. metropolitan areas, 2003–13," which appears in the September 2015 issue of the Monthly Labor Review (which is published by the US Bureau of Labor Statistics).

For his measure of wage inequality, Cunningham focuses on what is sometimes called the 90/10 ratio, which is the ratio between the income of the person in the 90th percentile of the wage distribution to the person in the 10th percentile of the wage distribution. "The most recent data show that the 90th-percentile annual wage in the United States for all occupations combined was $88,330 in 2013, and the 10th-percentile wage was $18,190. In other words, the highest paid 10 percent of wage earners in the United States earned at least $88,330 per year, while the lowest paid 10 percent earned less than $18,190 per year. Therefore, by this measure, the “90–10” ratio in the United States was 4.86 in 2013, compared with 4.54 in 2003, an increase of about 7 percent over that 10-year period."

How does this measure of inequality differ across metro areas? The most unequal metropolitan areas, where the 90/10 ratio is above 5.5, are shown by reddish shading in the map below. They are heavily concentrates from Washington, DC to Boston on the east coast, and then in the San Francisco/San Jose region on the west coast.

What are some of the factors correlated with higher levels of wage inequality? Larger cities tend to have greater wage inequality. Also, areas with a higher proportion of certain high-paying occupations tend to have greater wage inequality, including "management, business and financial operations, computer and mathematical, architecture and engineering; life, physical, and social science; legal; arts, design, entertainment, sports, and media; and healthcare practitioners and technical. Here's a list of the top 10 and bottom 10 cities according to the 90/10 measure of wage inequality--with a breakdown of some of these higher-wage occupations in these urban areas. 

I don't have have any especially deep point to make about these differences between cities. The list of high-inequality urban areas perhaps helps to explain why the Occupy movement was especially prominent in eastern cities and in the San Francisco Bay Area. It's useful to remember that both the issues created by inequality, and the consequences of taking steps to address inequality, will not be perceived or felt equally across urban areas.