Across the country, the rich keep getting richer while middle- and low-income households fall further behind. But in Boston, the growing income divide has not been as severe as in other cities, according to a report released Monday.
The report, compiled for the
Of 357 metropolitan areas studied in the United States, 248 experienced a shift in wealth distribution toward high-income households between 2005 and 2012. Albany, Ga., had the greatest change in favor of the high-wage earners, while the Lewiston-Auburn area in Maine had the 10th biggest shift. Boston, on the other hand, ranked 151st.
“The distribution of gains in those years has been relatively even across the income levels” in Boston, said Jim Diffley, the report author and economist at IHS Global Insight, an information and analytics firm based in Lexington. “Boston has done relatively better than other metros.”
The wage gap is a focus for Mayor Martin J. Walsh, whose administration is working on ways to lift people out of poverty and strengthen the middle class in Boston. Walsh is vice chairman of the Conference of Mayors’ task force on income inequality, which held its inaugural meeting in New York on Monday. The task force plans to tackle issues related to early-childhood education, access to technology, and benefits such as sick time, as well as housing, transportation, and workforce development.
In Boston, Walsh has established a task force with the goal of ensuring that every 4-year-old in Boston can attend a prekindergarten program, noting that these programs lead to improved success in academics and, eventually, the job market. An office of financial empowerment also is in the works to train residents in financial literacy and wealth-building. In addition, city officials are talking to teachers and industry executives about creating a better pathway from high school into the workforce, working to beef up apprenticeship programs, and looking to build affordable and workforce housing.
“If we follow this road map, we will actually close that divide,” Walsh said at the Conference of Mayors meeting. “We won’t be talking about the haves and have-nots. We’ll be talking about Americans who are able to make it: families who are able to make some money, earn some money, they will afford where they live, they will have good access to health care, good access to education, good access to housing, good access to transportation.”
The average median income in Boston was $72,700 last year, the sixth-highest in the country, according to the Conference of Mayors report, and is projected to grow to $84,400 in 2017. The city has one of the highest shares of families making $75,000 or more a year, at nearly 48 percent, and one of the smaller percentages of low-wage households, with 26 percent making less than $35,000 a year. The rate at which wealth shifted to higher-income households was roughly equivalent to the national average.
Boston has not fared as well in other income inequality reports. A study by the Brookings Institution earlier this year showed that Boston has the fourth-largest income divide between rich and poor among the country’s 50 biggest cities — behind Atlanta, San Francisco, and Miami. These results are more extreme than the Conference of Mayors report, study author Diffley said, because the Brookings Institution compared the top 5 percent to the bottom 20 percent, whereas the mayors’ report looked at a broader swath of incomes.
The nation’s growing income divide is increasingly being seen as a drag on economic growth. Last week, the credit rating agency Standard & Poor’s Ratings Services released research stating that the unequal distribution of wealth is hurting the postrecession recovery. Rising income equality leads to a less educated and less competitive workforce, reduced hiring, and fewer investments, according to the report.
The Conference of Mayors’ report showed that from 1975 to 2012 only one group experienced an increase in its share of the nation’s total income: the highest-earning 20 percent of households, which rose from bringing in 43.6 of the country’s income to 51 percent. The biggest increase of all was in the top 5 percent, which increased from 16.5 to 22.3 percent. The bottom 40 percent of households, on the other hand, brought in just 11.5 percent of the nation’s income, down from 14.7 percent in 1975.
One of the major factors contributing to the growing income divide is the high-wage jobs lost during the recession and the lower-wage positions that have taken their place, according to the report. The biggest job losses were in high-wage manufacturing and construction sectors, and the biggest gains were in lower-paid hospitality and health care positions. The average annual salary of jobs gained since the recession is $47,171 nationwide, 23 percent below the average salary of those lost in 2008 and 2009.
This dive in wages is much larger than it was following the 2000-2003 recession, when new jobs averaged a 12 percent lower wage than the ones lost.
Even people who have not changed professions have seen their earnings decline. Maria Barros, 62, has been working at Logan Airport for the past 16 years. During that time, her wages have slid from a high of $16 an hour, when she was a security supervisor in 2002, to $12, then $10, and now $9 an hour for her job as a passenger service representative, checking people’s tickets and helping them with the self-service kiosks. Things have gotten so bad that her son, Kevin, leaves money on her bedroom bureau to help her pay bills. “He puts it there because he knows that I’ll refuse to take it if he were to try to hand it to me,” she said in a report put out last year by Community Labor United, a Boston advocacy group for working families.
In several Boston neighborhoods, including Roxbury, Mattapan, and Dorchester, inflation-adjusted yearly wages fell by more than 20 percent between 1999 and 2011, according to Community Labor United.
In an attempt to shrink the growing wage gap, Community Labor United is proposing a city ordinance to curb wage theft among Boston business owners. To deter unscrupulous employers from paying workers below the minimum wage or withholding overtime, every business that applied for a license to operate in the city would undergo an investigation for wage and hour violations. The message, said executive director Darlene Lombos, would be: “The city won’t stand for having employers in the city that engage in wage theft.”