The top 1% in U.S. metropolitan areas

Abstract

Increases in U.S. income inequality are driven primarily by rapidly rising incomes of the top 1%. At the national scale, rising inequality is associated with negative consequences for economic growth and stability, a range of social problems and declining social mobility. To date, there is no or little work on the geography of the top 1% and their impact on the cities they inhabit. Using individual income data from the U.S. Census, the paper offers the first detailed analysis of the spatial distribution of the top 1% in the United States. The paper makes use of the range of socio-demographic variables attached to individual records to illustrate that the large majority of the top 1% lives in large cities and that women and ethnic minorities are largely excluded from membership in the top 1%. The widening gap between incomes at the top and bottom will thus lead to increasing gender and ethnic income inequalities. Exploratory analysis of the impact of the top 1% on the bottom 99% suggests that cities with large shares of the top 1% are characterized by higher levels of skill polarization, higher labour force participation rates and lower unemployment rates for those with little formal education and higher median incomes for the better educated. However, the paper shows that higher incomes are outstripped by higher housing costs indicating that any potential advantage trickling down from the top 1% to the bottom 99% is eroded by higher living costs. Preliminary analysis also suggests that cities with a higher share of the top 1% tend to be more segregated with potential implications for the supply, quality, access to and distribution of public local services.