Less pay for poor al­lows gap to grow

The Denver Post - - BUSINESS - By Josh Boak

wash­ing­ton » The in­come gap in ma­jor U. S. cities goes be­yond the trend of ris­ing pay­checks for those at the top: Pay has plum­meted for those at the bot­tom.

Many of the poor­est house­holds still earn just a frac­tion of what they made be­fore the Great Re­ces­sion be­gan in late 2007. Even as the re­cov­ery gained mo­men­tum in 2014 with oth­er­wise ro­bust job growth, in­comes for the bot­tom20 per­cent slid in New York, New Or­leans, Cincin­nati, Wash­ing­ton and St. Louis, ac­cord­ing to anal­y­sis of Census data an­nounced Thurs­day by the Brook­ings In­sti­tu­tion, a Wash­ing­ton think tank.

In only two cities— Den­ver and El Paso— did the bot­tom 20 have in­come sig­nif­i­cantly higher in 2014 than in 2007.

“It’s re­ally about the poor los­ing ground rather than th­ese up­per- class house­holds pulling away,” said Alan Berube, a se­nior fel­low at Brook­ings and deputy di­rec­tor of its metropoli­tan pol­icy pro­gram.

Con­sider Cincin­nati, home to such ma­jor com­pa­nies as Proc­ter & Gam­ble and Macy’s that are as­so­ci­ated with middle- class pros­per­ity. Cincin­nati’s bot­tom20 per­cent earned just $ 10,454 in 2014. Af­ter in­fla­tion, that is 3 per­cent less than what they earned in 2013— and 25 per­cent below their in­comes when the re­ces­sion started eight years ago.

Cincin­nati’s top 5 per­cent of earn­ers made at least $ 164,410 in 2014, a fig­ure that has in­creased since 2013, though it re­mains 7 per­cent below pre- re­ces­sion lev­els.

The con­se­quence is a widen­ing in­come gap. The top 5 per­cent earned 15.7 times what the bot­tom 20 per­cent did in Cincin­nati. Na­tion­ally, this ra­tio was 9.3 — the same as in 2013. Be­fore the re­ces­sion, the ra­tio was 8.5.

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