In San Diego, the poor are getting poorer and the rich aren’t making as much money, but the income inequality gap is still widening.
A study released last week by the Brookings Institution using 2012 Census data showed that the top 5 percent of earners in San Diego County make nearly nine times as much in household income as those in the bottom 20 percent. That ranks San Diego 35th out of the 50 largest metropolitan areas when it comes to income inequality, with local income for the 20th percentile at $25,126, and the top 5 percent at $224,814. The income discrepancies, the widest in Atlanta and San Francisco, hinder the economic recovery, Brookings says.
This story has been clarified to show that while income gaps closed based on a raw dollar amount from 2007 to 2012, the inequality rose based on a ratio of incomes of the lowest earners to the highest earners.
“A city where the rich are very rich, and the poor very poor, is likely to face many difficulties,” says the Brookings Study, written by Alan Berube. “It may struggle to maintain mixed-income school environments that produce better outcomes for low-income kids. It may have too narrow a tax base from which to sustainably raise the revenues necessary for essential city services.”
Locally, from 2007 to 2012, incomes for the top 95 percent dropped by $13,942, while earnings for the bottom 20 percent fell $3,158. While the income gap closed from a raw dollar amount, the ratio of the lower earners to the highest earners increased from about 8.4 to 1, to 8.9 to 1.
Kelly Cunningham, economist at the National University System Institute for Policy Research, said wages at the high end rose in that time period, but personal investments such as stocks were likely down.
But income inequality has been an issue since the 1980s, long before the Great Recession, said Alan Gin, economist at the University of San Diego. Gin said globalization and technological advances have hit manual labor for decades, contributing to a hollowing out of the middle class.
“Before that, you could make a pretty good living working in a union job in manufacturing and getting into the middle class,” Gin said.
While companies have restored some manufacturing jobs nationally over the last couple of years, the field declined in San Diego in 2013. Construction jobs, however, rose 10 percent to 62,400 jobs last year, as building permits increase, largely for multifamily units. Still, local employment in both sectors is tens of thousands jobs down from pre-recession peaks.
From 2007 to 2012, Denver, Seattle and El Paso, Texas, saw decreases in income inequality. El Paso saw the household income gap ratio drop from 10.7 to 9.4, but their highest earners still make 9.4 times the top 20 percentile, a gap wider than San Diego’s 8.9. Seattle and Denver’s gaps dropped by 0.2, with Denver’s highest earners making 10.6 times the lowest, and Seattle’s making 9.2 times the lowest.Copyright © 2017, The San Diego Union-Tribune