According to a study by the the Brookings Institution, the gap between the rich and the poor is the largest in some of the richest American cities. The Associated Press quoted the Brookings study saying, “The economic divides in Atlanta, San Francisco, Washington, New York and Los Angeles are significantly greater than the national average.”
Senior fellow at Brookings Alan Berube said that a relationship exists between inequality and economic success since the aforementioned cities “are home to some of the highest paying industries and jobs in the country.”
Berube argues that many of these cities have a widening gap between rich and poor people due to their public housing and the services that attract low-wage workers. But according to the AP, “the findings come at a delicate moment for the country, still slogging through a weak recovery from the Great Recession.”
The United States is undoubtedly going through some tough times. But how is the country’s income inequality compared to other nations?
The Washington Post claims the way in which income inequality is measured is going through some changes. For many years, economists often relied on the Gini coefficient to measure the income distribution throughout nations. However, others argue the Palma ratio should be adopted instead. Unlike the Gini coefficient, this formula makes it easier to measure the gap between rich and poor people in societies.
The U.S. ranks “well below every other developed society measured,” the Post suggests after analyzing 86 nations with the Palma ratio. “It’s one spot below Nigeria, which has some of the worst political corruption in the world and in 2012 saw nationwide protests over perceived income inequality.
In other words, despite America’s having more economic equality than most of the world, it is still placed “at the bottom end of the developed world.” Nevertheless, of the 50 biggest cities in the U.S., the AP said only 18 of them experienced inequality that was statistically significant since the recession occurred. However, this was largely due to the declining incomes of the poorest residents of these cities.
Allowing this pattern to continue will be detrimental to American societies in the long run. Therefore, to prevent the wealth gap from expanding in prosperous U.S. cities and to avoid the potential dissent that such inequality caused in other global cities, Washington needs to come up with a plan to make America less unequal.
– Juan Campos