Richmond ranks high in income inequality

Richmond has one the highest levels of income inequality in the United States. The poorest fifth of the city’s households receives 2.4 percent of the city’s aggregate income; the richest fifth gets 57 percent.

Gilpen Court

From Ireti Adesanya | Capital News Service

Windsor Farms is a historic neighborhood in Richmond’s West End just north of the James River. Its streets are lined with colonial-style homes meant to mimic an English village.

Seven and a half miles away is the Gilpin neighborhood in Richmond’s Northside next to interstates 64 and 95. Its streets are lined with one of the largest public housing projects on the East Coast, Gilpin Court.

Though just a 15-minute drive between Windsor Farms and Gilpin, the two neighborhoods are worlds apart in terms of socioeconomics. The average annual household income for residents in Windsor Farms is about $185,000; in Gilpin, the figure is less than $10,000.

The stark contrast in household earnings illuminates a disturbing fact: Richmond has one the highest levels of income inequality in the United States, according to data recently released by the U.S. Census Bureau.

The poorest fifth of the city’s households gets 2.4 percent of Richmond’s aggregate income; the richest fifth receives 57 percent. Just the top 5 percent of the city’s households get 29 percent of the aggregate income.

Here’s another way of looking at the numbers:

For the bottom quintile of the city’s households, the median income was $7,386. For the top quintile, the median income was $176,566. (and the top 5 percent of Richmond’s households had a median income of $360,958.)

The numbers are estimates; they’re based on the Census Bureau’s 2008–12 American Community Survey, which like all surveys has a margin of error. For the $7,386 figure, for example, the margin of error is plus or minus $415.

Even so, it’s clear that Richmond has a yawning income gap, and the widest in Virginia. Given the city’s history, that’s not surprising. Experts say segregation, racist banking practices and the construction of I–64 and I–95 disproportionately concentrated poverty in certain areas of the city.

Reasons for Richmond’s income inequality

That has been exacerbated by a lack of public transportation, the loss of jobs and a school system with more needs than money. The result: One in four of Richmond residents lives at or below the poverty line.

According to Thad Williamson, associate professor of leadership studies and philosophy, politics, economics and law at the University of Richmond, the lack of services prompted Richmond’s middle class to move to surrounding suburbs such as Henrico and Chesterfield counties.

“The school systems in Chesterfield and Henrico are higher-achieving on average than the city. And on top of that, we don’t provide transportation beyond the city lines,” Williamson said.

“So you have a situation where the average middle-class person has a huge incentive to be in a county as opposed to the city, especially those with kids.”

Michael Cassidy, president of the Commonwealth Institute, a nonpartisan policy and research organization, said Richmond’s income inequality reflects a growing trend across Virginia.

“Wages for the top 10 percent grew 19 times as fast compared to those at the bottom. The top 10 percent of earners– those are folks who are making at least $48 an hour– they’ve seen their wages grow over 8 percent since the start of the recession,” Cassidy said.

“But the wages for the bottom 10 percent of workers– these are workers making $8 an hour or less– they are now [making] 7 percent below their pre-recession-level wages.”

Virginia’s income gap has been growing for 30 years and is undermining the commonwealth’s economic prosperity, Cassidy said.

“As a result of these trends, Virginia is now facing record levels of inequality that really threaten the state’s economic stability and long-term prosperity,” he said.

“Middle-class and low-income individuals who make up most of the population in our state aren’t earning enough to buy the goods and services that the economy is capable of producing.”

It’s not just a problem in Virginia. Income inequality has been increasing in the United States for the past 40 years, according to the Center on Budget and Policy Priorities, a nonprofit think tank.

President Obama calls income inequality “the defining challenge of our times.” In a speech on December 4th at Knox College in Illinois, Obama said a ”dangerous and growing inequality and lack of upward mobility” have “jeopardized middle-class America’s basic bargain– that if you work hard, you have a chance to get ahead.”

Census data show a growing gap

The Census Bureau, economists, and statisticians measure income inequality with the Gini index, which calculates how evenly or unevenly incomes are distributed. The Gini index ranges from zero to one. A zero denotes perfect equality: a hypothetical society in which income is evenly distributed among all households. A one denotes maximal inequality: a society in which one household gets all the money and all the others go without. Thus, the more inequality, the higher the index.

In 1980, the Gini index for the United States as a whole was about 0.404. For 2012, it was 0.4757, an increase of 18 percent.

Among the states, Virginia ranks 22nd with an index of 0.4606. Washington, D.C., has the highest income inequality in the United States with an index of 0.5315, while Alaska has the lowest income inequality with an index of 0.4132.

Gini index

The Gini index for Richmond is 0.5413. That ranks No. 16 among the 3,143 counties included in the American Community Survey. (The U.S. Census Bureau treats Virginia’s independent cities as counties.) Manhattan (New York County) has the biggest income gap in the country, with a Gini index of 0.5994.

Moreover, Richmond had the third-highest level of income inequality among counties with at least 150,000 residents. Of these 401 localities, only New York County and Orleans Parish, La., had a higher Gini index than Richmond.

Richmond had more income inequality than San Francisco and Los Angeles counties in California; Suffolk County (Boston), Massachusetts; Miami-Dade County, Florida; and the New York suburbs of Fairfield County, Connecticut, and Westchester County, New York.

Richmond has the greatest income inequality in Virginia by far; the runners-up are Northampton County on the Eastern Shore, with a Gini index of 0.5291, and Charlottesville, at 0.5138.

Among Virginia’s 134 localities, incomes were more equal in Henrico County, which ranked 49th with an index of 0.4385, and Chesterfield County ranked 102nd with an index of 0.3979. Craig County has the lowest income inequality in Virginia, and one of the lowest in the nation, with an index of 0.3375.

A push for higher wages and better jobs

Growing inequality has sparked national protests such as the Occupy Wall Street movement; its slogan “We are the 99 percent” spoke to the unequal distribution of wealth in the U.S.

Fast food and retail trade workers have staged protests throughout the country calling on corporate giants like McDonald’s and Wal-Mart to increase the minimum wage to $15 an hour.

There are many theories for the continued growth of income inequality. They range from the elimination of jobs due to technological advancements to discrimination against women and minorities. Williamson believes the loss of jobs is the root cause.

“The heart of it is that the stable good-paying jobs that a person with a high school education or a little bit more could do– the jobs that created the American middle-class– have disappeared and haven’t been replaced,” Williamson said. “But at the same time, the people at the top have been doing just fine.”

The result is a shrinking middle class. Middle-class families, defined as households earning 50 percent below and above the median income, are earning less than middle-class families did in 1989. (If adjusted for inflation, the median household income in 1989 was $51,681; today it is $51,017.)

The decline in high-paying jobs is pushing more families into the lower class, thus widening the gap between rich and poor.

Derek Chapman, associate director of research at the VCU Center on Society and Health, said the growing gap prevents low-wage workers from getting medical services.

“Health is really tied directly to the distribution of resources. So one of the single strongest predictors of our health is where we sit on the social class structure. Those with the highest levels of education, job category and income live longer lives and healthier lives, and those at the bottom get sicker and die younger,” Chapman said.

Solutions to income inequality have been bandied about for decades. President Obama has proposed closing the income gap between men and women, increasing the minimum wage, reforming health care, and investing more in education.

Cassidy says such proposals would benefit Virginia.

“For example, in the Richmond area we have a large segment of our labor force that is low-wage workers. These [proposals] would be hugely helpful to those workers in helping them move up the economic ladder, as they seek to provide for the needs of their families,” Cassidy said.

In the meantime, the city has begun to budget for the implementation of policies outlined by the Maggie L. Walker Initiative for Expanding Opportunity and Fighting Poverty, formerly the Mayor’s Anti-Poverty Commission. According to Williamson, who is co-chair of the initiative, these are exciting times.

“Already they’ve created a workforce development program that is very innovative and exciting because that’s getting people into living-wage jobs,” he said.

photo of Gilpin Court by Taber Andrew Bain

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15 comments on Richmond ranks high in income inequality

  1. Melissa Gray on said:

    Trickle down economy was the billing 30 years ago, the Reagan administration ushered it in as the great saviour of America. but, as anyone who has waited on the elitists from Windsor Farms(which is on the North side of the James and is separated from a very low-income neighborhood by 8 lanes of highway and 2 railroad tracks) they don’t come off their cash very easily.

  2. Richmond Resident on said:

    I thought you were better than this RVANews. I’m not sure where to begin with all the mistakes made. “That has been exacerbated by a lack of public transportation, the loss of jobs and a school system with more needs than money. The result: One in four of Richmondr residents lives at or below the poverty line.” What a bunch of B.S.
    I’ll pick these apart one by one – Public Transportation – “The school systems in Chesterfield and Henrico are higher-achieving on average than the city. And on top of that, we don’t provide transportation beyond the city lines,” Williamson said. “So you have a situation where the average middle-class person has a huge incentive to be in a county as opposed to the city, especially those with kids.” I’m not sure what providing public transportation outside the city lines has to do with people leaving the city and going to the counties. Using this logic, people would continue moving away from the city to Hanover , Amelia, Powhatan, and Goochland because Chesterfield and Henrico provide no public transportation at all. Also, the last time I checked, people commute to the city for work and not the other way around. Residents of the city should be happy the buses don’t go into the counties to bring more competition for the current city jobs. If this is a reference to school buses, all school districts just bus kids around in their own locality.
    The Loss of Jobs – Just about everywhere in the U.S. has lost jobs due to the second largest recession in our country’s history. Duh
    Underfunded Schools – Let’s compare to the surrounding counties of Chesterfield and Henrico to Richmond. Money spent per student per year – Richmond – 10,503, Chesterfield – $9,587, Henrico – $9,369. So despite the fact the Richmond spends over 10% more per student, their test scores are much lower than the surrounding counties. Let’s compare some more appropriate figures. Single parent households –Richmond – 60%, Chesterfield – 26%, and Henrico – 34%. Hmmm. Perhaps we should address the family problem first before we ask for more of someone else’s money. Stop expecting the schools to raise the child and let them educate the child. Study after study has shown kids in two parent households out perform single parent household kids.
    In conclusion, this is just another social class warfare article that tries to pit the poor versus the rich by pointing out the lavish houses in Windsor and the poor public housing of Gilpin Court. In in the first paragraph, “The poorest fifth of the city’s households receives 2.4 percent of the city’s aggregate income; the richest fifth gets 57 percent”, you try to use these stats to show the rich are treated much better. Let me ask you this, what percent of the city’s revenues are paid by the inhabitants of Gilpin Court? What a sad day for RVANews.
    P.S. – Ben Franklin said it best – “I am for doing good to the poor, but…I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed…that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

  3. Anonymous on said:

    Guess what? We’re not communists. Of course it’s unequal. People in the higher echelons of the workforce are generally more ambitious and have graduated college. If you don’t like working at McDonalds, go to school, get an education, and work for your money like everyone else does instead of complaining about income inequality. Doctors don’t earn the same amount of money as janitors. Of course the city spends more money on the nicer neighborhoods. It’s one of the things that make them nicer neighborhoods, and one of the reasons people want to live there. Any society is going to have a lower income level and a higher income level. This kind of article is what gives ammunition to lower-income individuals to then go out and complain about life not being fair while they’re working in fast food and not continuing their education. What we NEED to be writing about is the lack of personal responsibility being taken by people who do nothing to better their situation.

  4. Woah on said:

    Yeah, we should get the government to steal from those rich bastards and redistribute it to the poor!

  5. Isaac on said:

    Land prices/taxes have pushed out manufacturing, there is a shortage of middle class jobs that require skill and a never ending supply of VCU kids to fill the low skill positions at entry level pay. Without exportable goods, we’re stuck with a trickle up economy as all the money seeps to the rich and then leaks out into luxury goods and services. The one good byproduct of this is the amazing food scene here.

  6. Chairman Brando on said:

    Isn’t at least some of this due to Richmond being an independent city? Most cities in the US “belong” to a county. Imagine if Richmond were a part of Chesterfield — would the income disparity be so large? Similarly, would we see a big rise in other cities if we measured them independently of their county?

  7. Does it make any sense to quote Obama, President 1% himself, in this article? The author Ireti Adesanya writes, “President Obama calls income inequality ‘the defining challenge of our times.’ In a speech on December 4th at Knox College in Illinois, Obama said a ‘dangerous and growing inequality and lack of upward mobility’ have ‘jeopardized middle-class America’s basic bargain– that if you work hard, you have a chance to get ahead.’”

    Why not tell your readers the truth: That the White House and both major parties don’t care about income inequality. That in fact the Democrats, the Republcians, and the POTUS have continued to push policies which impoverish working people, deliberately keep unemployment high, create economic insecurity for hundreds of millions of Americans, concentrate enormous wealth in the hands of the very few at the top, expand corporate power, and dismantle the modest social welfare policies which were won through class struggle?
    See: http://www.wsws.org/en/articles/2014/01/06/lead-j06.html
    https://www.google.com/search?q=austerity+bipartisan+site%3Awsws.org

    The “basic bargain” that Obama gives lip service to was always a fiction. But who would know that?

    Contrary to the popular misconceptions that FDR single handedly brought America out of the Great Depression through his New Deal, or alternatively, that the US entry into WWII created the rising tide that lifted all boats, in fact it was through the efforts of activists to get organized, strike, and put fear into the hearts of the ruling class that forced the concessions known as the New Deal.

    See: http://www.isreview.org/issues/25/The_1930s.shtml
    http://www.isreview.org/issue/71/unemployed-movements-1930s‎
    http://socialistworker.org/series/The-strikes-of-1934

  8. Denny R. on said:

    @ Melissa: You infer that you feel entitled to the money of people with more of it. Are you envious of them? Additionally, your comment about Ronald Reagan is wrong. Reagan took the reins of a miserable Jimmy Carter economy and put it, and the country, on an upward path of prosperity. Today marks the 50th anniversary of Lyndon Johnson’s “war on poverty.” The cost has been estimated to be $20 trillion and an ever expanding government. You can see how well this left/progressive thinking served our nation.

  9. Jaocb K on said:

    Melissa, I can’t imagine that most of the folks in Windsor Farms are bad greedy people, just as most of the folks in Gilpin Court aren’t violent drug dealing gang bangers. Sweeping with wide brushes is what our media loves us to do and encourages us to do. Do we need common sense progressive tax reform to reign in insanse salaries? Yes. Do we need programs that allow folks to work their way out of poverty instead of flounder in it? Yes. So why doesn’t it happen? Very simply the politicians in our country (usually uber wealthy themselves or aspiring to be so) and the very extremely wealthy (ie Koch brothers) actively collude to keep a poor working class poor while insulating their wealth through low capital gains taxes. The system is so broken that a revolution will likely have to occur and many good poor, middle class, and wealthy people will suffer and the hands of violence. The smaller but very heavily armed “Christian” right will hijack the revolution making things only worse. Through their years of Fox news indoctrination they will again deliver up our freedoms to the uberwealthy whom have survived the revolution (most of them). Three new classes will emerge, those who fought the uber wealthy will be subjected to domination and poverty, those who fought with the uber wealthy will be rewarded with fancy jobs and fancy things, and the uber wealthy will be uber wealthier….

    Jakerodomous has spoken.

  10. anon on said:

    Not one mention of race in this whole article?

  11. Jaocb K on said:

    Denny will obviously be fighting with the Fox News class.

  12. Timothy Wilson Spencer on said:

    Oh, great. The lets-turn-everything-into-a-political-argument retards have already shown up.

    Anyways, this will continue to be the case until the job market in Richmond becomes something to write home about. It’s really the most pathetic thing about the area. You can’t make a decent living as a waiter or bartender unless you have a trust fund and you can’t get a good job unless you start looking 2 hours to the north…

  13. Hawk Crenshaw on said:

    And socialist agitation is born anew. Not all inequality is an injustice. People are of different cultures and abilities.

  14. darudz on said:

    Hi Ireti,
    Your article ruffled a lot of feathers. Let me just make two comments:
    1. Please tell me whether you would like to live in a country with the lowest GINI index.
    2. With regard to your statement that the poor have a hard time gaining access to medical care: Go to the labor and delivery ward at Chippenham Medical Center and read the signs in both English and Spanish telling patients and their families that they cannot be refused medical care even if they cannot pay for it. Tell me how the poor are having trouble gaining access to medical care.

  15. Skip Skop on said:

    Look at some of the lower/middle class people who win millions of dollars in lotteries, and years later they are worse off then they were before….who do we blame then??

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