Washington, D.C.’s pervasive inequality manifests itself primarily in income and educational gaps, according to a series of reports released over the past few weeks.
A report analyzing the financial recovery since the recession released by the Fiscal Policy Institute Jan. 29 found that the wage gap in D.C. is at a 35-year high. Low-wage earners in the District earn an average of $12.62 per hour, a stagnant figure since the 1970s, while high-wage workers’ earnings averaged $45.30 per hour, a $6 increase since 2007 and a steady growth from the $30 average in the 1970s, a reflection of national trends.
“Wage disparity in D.C. is an extreme version of what’s happening in the country as a whole,” FPI Executive Director Ed Lazere said.
The report also noticed the unemployment rate in D.C., which, according to a report by Politico Magazine, is the highest in the country at 7.4 percent in 2014: the national rate was 5.6 percent in December 2014. The rate is particularly pronounced for specific groups, with a 16 percent unemployment rate among the black population in the District.
A study conducted by Wallethub on Feb. 3 corroborated the racial disparity in the District, noting a 64.71 percent median household income gap and a 72.76 percent educational achievement gap between whites and blacks. Ranked among the 50 states, the District has the seventh-highest financial gap by race.
A list of rankings of the 50 states and the District of Columbia by Politico Magazine starkly portrayed the inequalities in the District. Although D.C. was home to the highest per capita income, lowest obesity rate and highest percentage employed in computer, engineering and science industries, it also housed the highest violent crime rate, highest GINI index for income inequality, lowest average math and reading scores in the eighth grade and the lowest home ownership rate.
This lack of affordable housing, which was a focal point of the 2014 mayoral election and continues to be a problem with the inadequacy of homeless shelters this winter, cements the reality of inequality, according to Georgetown Center on Poverty and Inequality Senior Fellow Indivar Dutta-Gupta.
“Housing prices are a major challenge, especially in the rental market, for low, moderate and frankly, even middle-income families who have a tough time finding housing in areas that are affordable and also convenient for school and work,” Dutta-Gupta said.
The Office of the D.C. Chief Financial Officer revealed in a Jan. 28 study that low-income residents were more likely to leave the city; only 20 percent of people in the lowest quintile of income remained in the city from 2004 to 2012. According to Dutta-Gupta, low-income residents move from D.C. to suburbs like Prince George’s County in Maryland to reduce the housing expenditure, but this concurrently increases their transportation costs.
Inequality in the District, which houses both powerful politicians near Capitol Hill and people living in extreme poverty east of the Anacostia River, has long been an issue. McCourt School of Public Policy professor Harry Holzer pointed to the disparity between the growing wealthy population in northwest D.C. and a large low-income populace.
“People with law degrees and M.B.A.s flock to Washington because there’s a lot of well-paid work for them,” Holzer said. “Not necessarily in the government as much as all the law firms and the other businesses that have contracting relationships with the government.”
Holzer added that he believes the city’s inequality problems could possibly be worse than what is reported.
“If anything the official data might even understate how bad it is,” Holzer said. “Men with criminal records … don’t even show up in the data. If they were included, things might look even worse.”
Lazere concurred, noting that D.C. has a unique economy with few middle-paying, blue-collar jobs, creating a disparity between the large wealthy population and those in low-paying jobs.
“Because it’s a place where a lot of people come to visit or come for their work, it’s got a lot of hospitality jobs, a lot of food service, a lot of office maintenance jobs, and those tend to be low-paying and part-time. Those are the jobs where the wages aren’t going,” Lazere said. “At the same time, you’ve got a lot of people who are in the knowledge business, related to the federal government, lawyers … and those are the kinds of jobs where wages are growing.”
In inequality, however, D.C. is not alone among large American cities. Atlanta, San Francisco, Miami, Boston and New York City all have analogous or greater levels of income inequality.
Lazere attributed this nationwide trend to factors such as declining union power, growing globalization and the outsourcing of jobs to countries with comparably lower wages.
“Really, for the past 40 years, the economy has failed to provide broad prosperity,” Lazere said. “It’s not about workers being less productive or less educated. Workers are more educated than they were 40 years ago. Productivity continues to grow. It’s just that the basic connection between more productive workers [and] better pay just isn’t happening.”
In an attempt to address the issue, the District voted in 2013 to increase its minimum wage to $11.50 over a three-year period despite the federal minimum wage remaining stagnant at $7.25. Holzer was skeptical that the minimum wage hike would cure the inequalities.
“If you force them to pay $10 … or $12 for a product that right now costs $7.25, which was the federal minimum wage before it started going up, there’s a decent chance that some employers are going to hire fewer people,” Holzer said. “I don’t think that effect will be enormous. … But you’ve got to wonder about that risk about employment loss.”
Still, the flood of reports over the last few weeks expressing the magnitude of the inequality demonstrates the increased attention recently given to the issue.
“Inequality is a big American problem,” Holzer said. “It’s magnified in D.C. because of the extremes of both ends. The whole country is wrestling with what to do about this.”