The high and rising degree of income inequality in the United States now exceeds the highest disparity, recorded in 1927. News coverage of this issue often emphasizes the shares of income and wealth of the top 1 percent versus the 99 percent. It should interest the folks of greater Seattle that, as apparent as income inequality is in the urban landscape, our city is amazingly one of the least unequal metropolitan areas in the country — along with Minneapolis, Portland, and Salt Lake City. The most unequal metro areas are New York, Miami, Los Angeles, Houston and San Francisco.
It will not take a statistician to spot the key difference between these two urban sets — predominantly white versus high minority share areas, reflecting the historical effects of discrimination on income opportunities. Still, inequality is great and visible on the landscape.
It is also now possible to compare degrees of inequality within metro areas. Reasonable estimates of mean and median income have recently become available at the zip code level. This household data, which comes from the Internal Revenue Service (2009 to 2011), allows for mapping the geography of income differences, and also estimating inequality in the distribution of income.
Median household income is considered the “typical” income of an area; that is, the income of the middle household when all households are ranked from lowest to highest. Median household income is not affected by extremes.
Mean household income is the aggregate income of all households in an area — the areas in this case being zip codes — divided by the number of households. Mean income is extremely affected by even a few very rich or very poor households. The mean income of an area is usually higher than the median, which reflects the high concentration of wealth in the top 1 percent in contemporary America.
Inequality is a measure of how far the distribution of incomes differs from a situation in which all households had the same income. I use a simple measure of the inequality of income, which is the difference between the median and mean, divided by the median — or the percent by which the mean is higher than the median. Values above .35 are considered quite high.
It is the local juxtaposition of poor and rich households that leads to inequality. So it should not surprise that areas of high inequality tend to have a mix of richer families and single people, who may not be poor, but lower in income compared to families, which may have more earners.
Because the median represents the middle household in an area, it is considered the best descriptive measure of an area’s relative income. The greater Seattle income map will, for the most part, be what the informed reader expects, but it holds a few surprises.
Median income levels in greater Seattle