Income inequality study adds context to City Hall debates

Posted by George Hostetter on February 20, 2014 

I’m working on an advance story for the Feb. 27 Fresno City Council meeting. That’s when the council is expected to vote on the future of Fulton Mall — bring back cars to the six blocks between Tuolumne and Inyo avenues, spruce up the place or leave it as is?

The council’s decision has significance beyond the possibility of once again cruising what was once Fresno’s main street. Mayor Ashley Swearengin has said for three years that downtown in general and Fulton Mall in particular are generating only a tiny fraction of their economic potential.

The return of cars to Fulton Corridor will, in the fullness of time, make the place an engine of wealth-generation, the Mayor says. This can-do spirit will spread, domino-like, to surrounding neighborhoods. The result will be a richer, more dynamic, more equitable Fresno economy, the Mayor says.

One of Swearengin’s main points in justifying bold action is Fresno’s deep poverty. We’ve all seen the many reports proving this.

But there’s another report that adds interesting context to the picture of wealth and poverty in Fresno. It’s from the Brookings Institution’s Alan Berube and was published today.

Using the latest U.S. Census data, Berube looks at household income inequality in America’s 50 largest cities. Fresno is among the 50.

“There are many ways of looking at inequality statistically; one useful way to measure it across places is by using the ‘95/20 ratio,’” Berube writes. “This figure represents the income at which a household earns more than 95 percent of all other households, divided by the income at which a household earns more than only 20 percent of all other households. In other words, it represents the distance between a household that just cracks the top 5 percent by income, and one that just falls into the bottom 20 percent. Over the past 35 years, members of the former group have generally experienced rising incomes, while those in the latter group have seen their incomes stagnate.”

Berube has produced a fascinating report, one with policy importance as Fresno City Hall in the coming months tackles such social-engineering proposals as the 2035 general plan update, the Bus Rapid Transit system and, of course, Fulton Mall.

Here are a few of Berube’s findings:

* Fresno ranks No. 20 on the list of income inequality for 2012 based on the 95/20 ratio. Fresno’s ratio is 10.2. Fresno’s population is 505,870. The 20th percentile figure is $15,665. The 95th percentile figure is $160,360.

* Atlanta is No. 1 in income inequality by this measure for 2012. It’s 95/20 ratio is 18.8. San Francisco is No. 2 at 16.6. Miami, Fla. is No. 3 at 15.7. Boston is No. 4 at 15.3. Washington D.C. is No. 5 at 13.3.

* Virginia Beach, Virginia is No. 50 in income inequality by this measure for 2012. It’s 95/20 ratio is 6.0. Arlington, Texas is No. 49 at 7.3. Mesa, Arizona is No. 48 at 7.5. Las Vegas is No. 47 at 7.69. Wichita, Kansas is No. 46 at 7.74.

* Fresno’s 20th percentile figure of $15,665 for 2012 isn’t lowest among the 50 cities. Ten cities have lower figures. They include Atlanta, Boston, Tucson and Milwaukee.

* Fresno’s 95th percentile figure of $160,360 for 2012 isn’t lowest among the 50 cities. Fifteen cities have lower figures. They include Indianapolis, Louisville and Columbus, Ohio.

* Fresno’s 95/20 ratio in 2007 was 8.8. It rose 1.4 (8.8 to 10.2) in five years. This jump of 1.4 wasn’t the biggest jump among the 50 cities in that five-year period. Nine cities had a bigger jump, including Baltimore, Charlotte, N.C. and Sacramento.

* The 95/20 income inequality ratio for 2012 among the first 17 cities ranges from 18.8 for Atlanta to 10.7 for Cleveland. That’s a difference of 7.1.

The ratio for 2012 for the next 17 cities ranges from 10.6 for Tulsa at No. 18 to 9.0 for Nashville at No. 34. That’s a difference of 1.6. Fresno is in this mid-tier group. It’s a group with a narrow band of difference in ratio. Portland, Oregon and Seattle are in this group, as well.

The ratio for 2012 for the final 16 cities ranges from 8.9 for San Diego at No. 35 to 6.0 for Virginia Beach at No. 50. That’s a difference of 2.9.

* Fresno between 2007 and 2012 saw income in the 20th percentile group drop $3,257. Sixteen cities saw a bigger drop.

* Fresno between 2007 and 2012 saw income in the 95th percentile group drop $6,171. Twenty-seven cities saw a bigger drop.

How to interpret these numbers?

Berube ends his report thus: “Large populations, diverse housing types, and generally progressive politics mean that most cities will always have higher shares of the rich and poor than smaller places. But the contemporary causes and consequences of inequality in cities vary greatly across the national map. Mayors who want to promote both economic diversity and economic mobility in their cities should take note.”

Seth Mandel, writing today in Commentary Magazine Online, comes to this conclusion: “The Brookings study finds that cities with high inequality are better at producing wealth — and for good reason. The job market in such cities tends more toward growth industries.”

Mandel adds that “in some cases, higher income inequality might go hand in hand with economic vibrancy, the study found.”

Mandel concludes with a paragraph that seems a perfect fit for the infill development debate that is causing such controversy in Fresno:

“How do you cut inequality without destroying the economy? You simply import people who aren’t rich and aren’t poor! But what does this tell us about the concentration on income inequality? That it’s a case of misplaced priorities. Importing not-rich-but-not-poor residents doesn’t make any structural change to the city’s economy so much as it papers over the causes of inequality by gaming the numbers.

“Democrats and the president make the case that the key to fighting inequality is making the poor un-poor. Importing middle-class folks from the suburbs doesn’t do that, does it? Sure, it may have peripheral benefits for the less well-off. But it doesn’t rescue others from poverty. It simply makes it look like poverty is less endemic. It’s a cosmetic façade, in other words.”

My view based on Berube’s report: Yes, Fresno has many poor people. Yes, strong job-growth is vital to Fresno’s future. But maybe Fresno isn’t, as has been portrayed at our City Hall for 15 years, America’s poster child for “a tale of two cities.”


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