The larger and more vibrant cities in the United States have more income inequality than the smaller cities. This could be because of the industries that are in the cities. The technology and finance cities are going to have higher incomes than the cities that have transportation or warehousing sectors. The lower income cities are mostly located in the Midwest and South. President Obama said that he would raise the minimum wage to reduce the inequality. Many mayors are also trying to lower the income inequality. They could do this by raising the taxes on the higher income people and also creating incentives like better schools and cheaper housing.
http://www.nytimes.com/2014/02/20/business/economy/study-finds-greater-income-inequality-in-nations-thriving-cities.html?ref=economy&_r=0
4 comments:
I think this finding is not surprising, but the authors did come up with some good explanations on the correlation between inequality and economy of the cities. It is not just because the rich get richer as they invest in technology and finance, but the poor also get poorer as what they have to offer is less in demand. One thing that I can draw from this article is politics may influence the income inequality of the cities. Also, we currently cannot find any solution to this problem. Progressive tax has been implemented for several decades, yet the gap between the rich and the poor is still widening.
I think thriving cities has wider inequality gaps because it's where rich people and poor people gather. Rich people probably come to thriving cities to make investments to make even more money while poor people come to find any better job.
It's no coincidence that many of the richest and most successful people can be found residing in finance and technology hubs like NYC, and San Francisco. Maybe in order to bring progress and wealth to regions in the Midwest and South, the government and states need to invest in creating the institutions and infrastructure that make up thriving-wealth communities. People respond to incentives.
It is true that progressive tax has been implemented for several decades and modifying this policy again will not decrease unemployment dramatically on its own, and may not help the unemployment rate at all. President Obama’s plan to increase the minimum wage may not be helpful in decreasing unemployment. Increasing wages more above the equilibrium for supply and demand for labor could decrease the demand for labor and raise unemployment.
I agree that thriving cities have wider inequality gaps due to their investment and employment opportunities attracting people at the top and bottom levels of income. I agree with Mainza’s point that increasing incentives in the Midwest and South would help those city’s growth. Fort Worth, Texas was the fastest growing largest city, according to the U.S. Census Bureau, with more than 500,000 population between 2000 and 2010. This is mostly due to Fort Worth’s increased incentives, such as neighborhood organizations and tax increment financing, to move to the city.
Sources:
http://fortworthtexas.gov/PlanningandDevelopment/default.aspx?id=12824
http://fortworthtexas.gov/hed/business/
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