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The District of Columbia has one of the highest levels of income inequality of any large city in the country, according to a new report by the D.C. Fiscal Policy Institute. Researchers also found that the average income for the top 5 percent of D.C. households is the highest of any major urban enclave in America. Kojo speaks with one of the study’s authors and explores the implications of income inequality in the District, as well as policies being offered as potential ways to shrink the gap.
- Wes Rivers Policy Analyst; D.C. Fiscal Policy Institute
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. Later in the broadcast, "Your Inner Fish" paleontologist Neil Shubin on how human body parts have evolved from fins, gills, and other traits of sea creatures. But, first, a less welcome evolution, if you will, in the District of Columbia.
MR. KOJO NNAMDIAccording to a new report by the D.C. Fiscal Policy Institute, the nation's capital has one of the highest levels of income inequality of any large city in the country. How high? Researchers found that the average income of the top five percent of D.C. households is more than 50 times the average of the bottom 20 percent.
MR. KOJO NNAMDIBut the root causes of these statistics and potential course corrections for the future are anything but simple. Joining us to explore the findings of the research and what they mean for the city is Wes Rivers. He is a policy analyst at the D.C. Fiscal Policy Institute. Wes Rivers, thank you for joining us.
MR. WES RIVERSThanks for having me, Kojo.
NNAMDIYou too can join the conversation at 800-433-8850. What concerns do you have about income inequality in the District of Columbia? What do you think explains the fact that income gaps here are higher than in most large cities in the United States? 800-433-8850. You can send email to us at email@example.com. Wes Rivers, some of the numbers in your research are staggering. What kind of picture does this report paint of the city? Doing the mayoral race, a lot of the rhetoric has been about D.C. becoming a city of haves and have-nots.
RIVERSWell, I think it shows that we have a specific group of people who have done very, very well in the economic growth of recent years. Staggeringly, we found that the top five percent average income is the highest of any large city in the United States.
RIVERSIt's about $530,000. So to put that in a perspective, that's 100,000 more on average than New York City, and quite significantly larger than Philadelphia and Boston as well.
NNAMDIHow about the bottom income levels?
RIVERSIt's around $10,000 average for the bottom 20 percent of income. You know, in a city where fair market rent is $15,000 a year, the lowest quintile faces a quite staggering cost of living.
NNAMDIWhat are the cities, if any, that have higher disparities between top and bottom income levels than the District? And what do we have in common with those cities?
RIVERSSo the cities that have significantly larger gaps would be Atlanta. Atlanta would be the most significant gap. And in Atlanta, we do have similar incomes both for the top and the bottom. The incomes at the bottom are just much lower than they are in the District. Miami and Boston also experience a similar level of income inequality as the District but not too statistically different.
NNAMDIWhat do we have in common with those cities?
RIVERSI think, the fact that those cities have -- are doing quite well at the top is one thing. You know, economic growth in the recent years has been quite well. But we do see in two of those cities that wages at the bottom have shrunk from 2008 to 2012.
NNAMDIAnd that's what's common here in Washington also? Wages have shrunk essentially?
RIVERSYes, and for lower-skilled workers in particular. And economic opportunity being jobs that are available for these workers, they're not having the skills that low-wage working these days requires.
NNAMDIYou mentioned $15,000 a year for housing. How does the cost of living overall in D.C. compare with those other cities with income gaps that large?
RIVERSSo our cost of living is above average, so our average income for the bottom quintile actually only covers a very small share of what the basic family budget would be for the District. And when you look at the other cities' basic family budget, they do much better. Forty-one cities actually do better at covering their basic family budget at the bottom.
NNAMDII'm looking at the average income of the bottom fifth of D.C. households being just $9,900. And it says that kind of income just covers 12 percent of the basic family budget of $85,000 for a single parent with two children, the ninth worst when compared with other large U.S. cities. So if you're making $9,900 a year in D.C., you really just can't afford to live here without a whole lot of help.
RIVERSYou're basically scraping by. And without proper supports, you really can't live here.
NNAMDIOur guest is Wes Rivers. He's a policy analyst at the D.C. Fiscal Policy Institute. And we're talking about income equality (sic) in the District of Columbia, which turns out to be larger than most comparable cities in the United States. We're inviting your calls at 800-433-8850. What do you think would help to course correct some of the levels of income inequality in the District of Columbia?
NNAMDI800-433-8850. What do you see as the causes of it? You can send us email to firstname.lastname@example.org or shoot us a tweet, @kojoshow. What sense do you have for the root causes of these levels of inequality? Clearly, this is a local economy that's doing a lot to drive wages up at the top end of the spectrum. What's leaving those behind at the bottom?
RIVERSWell, I think not having the proper supports to deal with the cost of living is important. When you have a financially stable household, it's much easier to gain some economic mobility going forward. The other thing is there's quite a bit of a skills gap. So we found that, you know, having the basic literacy skills and computer skills to perform some of the higher wage work that our low-wage workforce does not have those skills quite up -- quite as of yet. So having policies that really drive things like adult literacy can really change those outcomes.
NNAMDICan you use your data to trace the geography of these inequality statistics in D.C.? Does it follow traditional narratives of money being clustered where we are, west of Rock Creek Park, poverty being clustered east of the Anacostia?
RIVERSSo the data that we have does not quite show that. We do have findings on wage and how that's changed for specific populations, you know, lower education equating to loss in wages over time, job opportunities for African-Americans not being as high as those for white residents. But specific geographies, the data really doesn't get at that.
NNAMDIYou mentioned adult education earlier. And there's been a lot of talk lately, especially in this mayoral race, about what can be done about education in general, specifically in public schools or the public school system of which the charter schools are a part. But there's not a great deal that has been said about adult education, even though in the past we knew that adults' rates of literacy in Washington were particularly low. It seems to me that an infusion of concern, interest, and dollars in adult literacy can help to solve some of these problems.
RIVERSYes. It can solve one for the current workforce who are of adult population but also for our children. It's been shown that adults with higher literacy skills can -- and numeracy skills can actually teach their children at home. There can be kind of from school back to the home learning, so having the basic skills of literacy and numeracy, but on top of that having, you know, basic computer skills. You know, there's a lot of jobs in hospitality and in healthcare, but to get those, you need the basic skills to use a computer, use Microsoft Office to basically function.
NNAMDII mentioned earlier the mayoral race. I'd like to ask our listeners, where does income inequality factor in to your voting decisions this year in the District? 800-433-8850. We got a tweet from Dominguez-Urban who says, "Does the income study include benefits received such as public assistance, housing subsidy, et cetera?"
RIVERSSo it doesn't include in-kind subsidies, so what you would get as a housing voucher or food stamps, but it does include -- but not very well -- cash assistance, such as T.A.N.F. or Temporary Assistance to Needy Families. But you look at that at the bottom, so those are some supports that you would get at the bottom that it doesn't necessarily reflect. But if you also look at the top, the income measure does not include capital gains which is a large source of wealth for the top 5 percent. So we think that this measure is pretty accurate of what's going on.
NNAMDIIn his State of the District Address last week, Mayor Vincent Gray laid out some policy prescriptions for closing some of these gaps. How do they stack up against what you think can be done at the local level? Of course, earlier this year, the D.C. Council passed a bill that will raise the city's minimum wage to $11.50 by 2016.
RIVERSWell, I -- you know, I try not to get that -- I'm a research analyst, not a political analyst. But some of the mayor -- some of what the mayor mentioned, including affordable housing, is absolutely necessary. We need him to make large-scale investments in our affordable housing stock just to have families be able to live in the District. As you saw, 10,000 versus fair market rent at 15,000 is just not going to cut it.
NNAMDIWe got an email from John in Columbia Heights who asks, "What can be done to reset the housing or the rental market to be more in line with those living in the bottom 95 percent than in the top 5 percent? It seems like many of us are trying to purchase homes or pay rent that's more appropriate for those at the top end of this absurdly out-of-whack income scale."
RIVERSAgain, it's all about having the stock of housing that meets the needs of the people of the District.
NNAMDIThe mayor has said, of course, that he's going to invest $100 million in affordable housing. But one of the problems when you have income inequality this wide is exactly how we define affordable. Seems to be shifting sands about how we define affordable in this environment.
RIVERSThat's right. As income grows, rents rise. And as we see from the research, incomes at the bottom don't necessarily rise with the rise of rent and the rise at the top. So that is a very difficult question to answer as to how we define affordability.
NNAMDIWes Rivers is a policy analyst at the D.C. Fiscal Policy Institute. We've just been talking about a study showing that income inequality in the District is greater than it is in most comparable American cities. Thank you so much for joining us.
RIVERSThanks for having me.
NNAMDIWe're going to take a short break. When we come back, "Your Inner Fish" paleontologist Neil Shubin on how human body parts have evolved from fins, gills, and other traits of sea creatures. I'm Kojo Nnamdi.
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