Day after day, Americans are reminded about the gulf between the very rich and the poor. The U.S. currently is home to scores of billionaires, led by Elon Musk, Jeff Bezos, Bill Gates, and Warren Buffet. A the same time, millions of Americans live below the poverty line. Recently headlines have shown that low wages have triggered unionization efforts at large companies which include Starbucks and Amazon. Some of these pay little more than the minimum wage.
While much of the attention has been about the income gap on a national level at a local level, it is even more evident. To determine the U.S. city with the widest income gap, 24/7 Wall St. used data from the U.S. Census Bureau’s 2020 American Community Survey. All other data came from the ACS.
We looked at cities ranked by their Gini index, a measure of income inequality based on the distribution of income across a population on a 0 to 1 scale, with 0 representing perfect equality and 1 representing the highest possible level of inequality. Among the cities we considered, Gini scores begin at 0.54 — well above the national Gini index of 0.489, according to Census Bureau data.
In places known for their wealthier demographic, such as Palm Springs and Beverly Hills in California, Palm Beach Gardens and Miami Beach in Florida, and New York City, there are often immense income gaps. The rich people in all these cities rely heavily on services provided by low paid workers, often immigrants
A surprising factor among the reasons for income disparity is the location of colleges and universities. Students living off campus are counted among residential households, and, while many of them may come from wealth and are paying high tuition, their income tends to be low to non-existent. This is at least a partial explanation for why such cities as Princeton, New Jersey; Ithaca, New York; Chapel Hill, North Carolina; Boulder, Colorado; and Amherst, Massachusetts have such wide gaps.
Poughkeepsie, New York, home to Vassar, Marist, and a community college, tops the list as the U.S. city with the widest income gap. While the top 20% of earners have a relatively low average income of $283,549, they take in over 63% of all income in the area. Meanwhile, the average income of the bottom 20% of earners is just $9,404, and they cumulatively make just 2.1% of the area’s income.
Methodology: To determine the U.S. city with the widest income gaps, 24/7 Wall St. used data from the U.S. Census Bureau’s 2020 American Community Survey. Cities 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, with 0 representing perfect equality and 1 representing the highest possible level of inequality. For the purposes of this story, cities are defined as any place covered by the census with populations over 25,000.
Additional information on average household income by quintile, share of aggregate household income by quintile, and median household income are five-year estimates from the 2020 ACS.
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