Rich Get Richer While Poor Hold Their Own
By FORD FESSENDEN
Published: September 2, 2007
THE trip from Bridgeport’s poor neighborhoods to the mansions of Greenwich crosses a canyon of income inequality rivaled by few places in the country, new census data show.
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Fairfield County has one of the sharpest contrasts between rich and poor in the nation, a vast gap in fortunes exceeded only by a few other places, led by Manhattan but most of them poor counties in the deep South and far West, according to measures that the Census Bureau released for the first time last week.
The highest-earning fifth of households in Fairfield made $362,103 on average, 22 times as much as the bottom fifth, whose average was $16,019, according to the Census Bureau. The top 5 percent in Fairfield made $746,726, on average, the highest in the country.
In much of the country, wide gaps between rich and poor occur because poverty there is extreme. For instance, Apache County, Ariz., which contains Navajo and Apache Indian reservations, was the second highest in income inequality, and the income of the bottom fifth of households was $2,835. In Tuscaloosa County, Ala., which ranked seventh, it was under $6,000.
But in the New York metropolitan region, and in the Northeast in general, inequality is driven by the great wealth of the top-earning group. Manhattan had the most unequal income distribution in the country, with the top fifth making 40 times the average of the bottom fifth. Fairfield ranked 14th in the country, while Essex County, N.J., which includes Newark, ranked 12th. Westchester was 29th.
“In general, inequality has gotten worse not because people in the middle or bottom have lost, but people at the top have gained enormously,” said Robert H. Frank, an economist at Cornell University’s Johnson School of Management, a contributor to The New York Times and author of “Falling Behind: How Rising Inequality Harms the Middle Class.”
Some economists say the inequality in the region is a natural outgrowth of the area’s heavy reliance on property taxes to finance local government, because people with means move to places that have better services, paid for by higher taxes, stratifying income and privilege by geography.
“If you start with a system of heavy reliance on the local property tax and have mobile populations, you’re going to end up with geographic distributions that are unequal,” said Frank S. Levy, a labor economist at the Massachusetts Institute of Technology. “People in jurisdictions where there’s not a lot of money are left to fend for themselves.”
Some of that imbalance is addressed by state aid to education and by court-ordered equalization of spending on schools. In Connecticut, an infusion of new state dollars to local school district this year actually had the effect of shifting the proportion of state aid to rich suburban districts, who were demanding tax relief. Urban districts have filed a lawsuit to get more state money.
In New Jersey, Newark and some other poor urban school districts now spend as much per pupil as the richest districts because of a court order. And Newark’s poverty has actually eased recently, according to the new census data; it posted one of the biggest gains in median income of any city in the country.
But inequality in close geographic proximity leads to other potential problems, economists say. Spending by the wealthy not only makes the price of things higher for others, but also creates pressure to spend.
“The context is always local, so if you live in Nepal, the kind of house in which you feel it’s O.K. to live is vastly different from some other place,” Dr. Frank said. When someone lives in a better place nearby, he said, people feel the pressure to spend on better housing.
The spectacular gains at the top create pressure all the way down the income ladder to spend more, which puts more people under financial duress, Dr. Frank said.
“We looked at county data from 1990 to 2000, and the counties where income inequality grew the most, even after controlling for other factors, had higher increases in divorce rates and bankruptcy filings, and in the proportion of those taking long commutes,” Dr. Frank said.
There are also studies that show that people’s health is worse in places with high income inequality, even after controlling for the bad health effects of being poor. “Being in the bottom of a group is just stressful,” he said.
Apart from the issue of inequality, the new census figures show that Connecticut remains in third place in the nation in median income, at $63,422. New Jersey, with median income of $64,470, relinquished the distinction as the state with the highest median income, falling to second behind Maryland, with median income of $65,144, in 2006.
Four of the top 10 counties in the country in median income are in the New York metropolitan area, including three in New Jersey: Hunterdon, with median income of $93,297, was fourth; Somerset, at $91,688, was sixth; and Morris, at $89,587, was seventh.
Nassau County ranked 10th and, at $85,994, had the highest median income among counties in New York in 2006. Fairfield’s median income was $76,671.
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