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Boston 4th for income gap between rich and poor

Boston’s dynamic, hard-charging economy comes at a price: greater income inequality.

Boston has the fourth-largest gap between rich and poor among the nation’s 50 largest cities, according to a study released on Thursday by the Brookings Institution, a Washington, D.C., nonprofit. Only Atlanta, San Francisco, and Miami had wider income divides between the top 5 percent of earners and the bottom 20 percent.

Boston’s innovation economy has contributed to the divide, analysts said. Technology, life sciences, and financial services helped the city weather the recent financial crisis and kept unemployment from skyrocketing during the last recession.

Those industries prize a highly educated and skilled workforce and reward those workers with high salaries and opportunities to climb the income ladder, said Robert Nakosteen, an economics professor at the University of Massachusetts Amherst. But workers without college degrees don’t fare as well.


In addition, some of those workers were trained in jobs, such as traditional manufacturing, that are no longer in demand. As a result, they are relegated to low-paying service jobs, where income has stagnated.

“If you have the right skills and education, you’re able to put yourself in the Boston economy, you can be upwardly mobile,” Nakosteen said. “The inequality is inseparable from the economic dynamism.”

In Boston, wealthy households made an average of almost $224,000 annually, 15 times more than a low-income families, who earned $14,600 a year.

The divide can raise tensions. Some cities are struggling to maintain affordable housing as wealthy families move in driving up property prices.

In San Francisco, for example, demonstrators recently blocked a private shuttle bus for high tech workers, which had become a symbol of a two-tiered class system, said Alan Berube, a senior fellow at Brookings and author of the report.

The impact of Boston’s wealth can be measured in the increasing cost of housing and the slew of luxury retailers, from Chanel to Hermes, that have opened stores or expanded their showrooms in Boston.


Lower-income households throughout Massachusetts, however, are struggling.

A study last year by Northeastern University found that in Massachusetts, 1 in 5 workers, or 20 percent, from households with incomes of less than $20,000 a year are jobless, compared with just 3.3 percent of workers from households earning more than $150,000 annually.

According to that study, 55 percent of workers with less than a high school diploma living in households with annual incomes of less than $20,000 were unemployed, underemployed, or no longer searching for jobs.

Only 3 percent of those with master’s degrees from households earning more than $150,000 a year were unemployed or underemployed.

While the financial crisis hit the wealthy too — shaving almost $15,000, or about 6 percent, off their average household income between 2007 to 2012 — it had little impact on Boston’s wealth gap during that time, the Brookings study found. Poor families in Boston also saw their average income fall by nearly $1,360, or about 8 percent.

The report found that southern and western states had cities with the lowest levels of income inequality, including Mesa, Ariz., Raleigh, N.C., and Omaha.

In the 50 largest cities on average, the wealthy families made 11 times more than their low-income counterparts.

Deirdre Fernandes can be reached at Follow her on Twitter @fernandesglobe.