This Is The American City With The Smallest Income Gap

No effort to change the income gap has worked. Most recently, some members of Congress wanted a special tax on America’s 700 billionaire families. (No one can be sure that is the right number.) That failed. Nevertheless, new legislation is likely to raise taxes on those who make $400,000 a year or more. Even a plan this ambitious does not entirely address the billions of dollars in net worth added by the wealthy since the start of the COVID-19 pandemic, driven largely by a soaring stock market. At the other end of the spectrum, the Census Bureau showed over 37 million Americans lived in poverty in 2020.

Income equality has been a problem for the entire time the United States has been a country. In recent decades, the federal government has tried to bridge the chasm with ways to try to move more wealth from the very rich to the poor and middle class. The way this is attempted most often is via high taxes on the wealthy.

Using data from the U.S. Census Bureau’s 2019 American Community Survey, 24/7 Wall St. identified the ZIP code with the smallest income gap. ZIP codes are ranked by their Gini coefficient, a measure of income inequality based on the distribution of income across a population on a 0 to 1 scale — 0 representing perfect equality and 1 representing the highest possible level of inequality.

Among the ZIP codes we looked at, Gini scores range from 0.308 down to 0.225 — well below the national Gini coefficient of 0.482. The places on this list span the country but tend to be concentrated in the South. Six ZIP codes on this list are located in Virginia alone.

Incomes are generally high in the ZIP codes we considered. All but a handful of the ZIP codes with the lowest income inequality have a higher median household income than the national median of $62,843.

The causes behind rising inequality are complex and varied. A report published by the National Bureau of Economic Research ties the rising disparity to a range of economic factors, including globalization, technological advancement, a stagnant minimum wage, and the decline of labor unions.

The ZIP code with the smallest income gap is 85540. Here are the details:

> Location: Morenci, Arizona
> Gini index: 0.225
> Avg. household income, top 20%: $139,213 — 3,445th lowest of 16,708 zip codes (tied)
> Avg. household income, bottom 20%: $43,941 — 153rd highest of 16,708 zip codes
> Share of all income in 85540 that went to top 20%: 33.1% — 2nd lowest of 16,708 zip codes
> Share of all income in 85540 that went to bottom 20%: 10.4% — the highest of 16,708 zip codes
> Median household income: $72,934 — 5,127th highest of 16,741 zip codes (tied)

Methodology: To determine the ZIP code with the smallest income gap in the nation, 24/7 Wall St. reviewed five-year estimates of the Gini Index of income inequality from the U.S. Census Bureau’s 2019 American Community Survey.

The Gini Index of income inequality summarizes income dispersion in an area on a scale from 0 to 1. A value of 0 indicates perfect equality — everyone in the area receives an equal share of income. A value of 1 indicates perfect inequality — only one recipient receives all the income.

We used ZIP Code Tabulation Areas — a census geography type which defines areal representations of United States Postal Service ZIP codes (USPS ZIP codes do not define geographic boundaries but instead are a network of mail delivery routes in a service area). We refer to Census ZCTAs as ZIP codes.

Of the 33,120 ZIP codes the Census publishes data for, 32,989 had boundaries that fell within one of the 50 states or the District of Columbia.

ZIP codes were excluded if the Gini Index was not available in the 2019 ACS, if there were fewer than 1,000 housing units, or if the sampling error associated with a ZIP code’s data was deemed too high.

The sampling error was defined as too high if the coefficient of variation — a statistical assessment of how reliable an estimate is — for a ZIP code’s Gini Index was above 15% and greater than two standard deviations above the mean CV for all ZIP codes’ Gini Indices. We similarly excluded ZIP codes that had a sampling error too high for their population, using the same definition.

The remaining 16,742 places were ranked based on their Gini Index. To break ties, we used the share of aggregate household income earned by the top 20% of households.

Additional information on average household income by quintile, the share of aggregate household income by quintile, and median household income are also five-year estimates from the 2019 ACS.

Click here to read American ZIP Codes With The Smallest Income Gaps