Urban Income Inequality

Cities attract a diverse population. Really, it’s this diversity that allows cities to be the engines of innovations and cultural progress. However, one stark effect of housing different populations in the same area is the gap between those with means and those without. A recent report by the Brookings Institution, summarized in a New York Times article, expands on how this income inequality comes about and where it is trending. The conclusion is that cities with high per-capita income—what the New York Times’ author calls “thriving”—are also the ones with the most pronounced income inequality. Midwestern and Southern cities with less booming economies show lower income inequality.

Why is that?

My first reaction is: Obviously! Income inequality is the gap between the poorest and the richest. (In fact, the Brookings study notes they use a common—but not the only—measure, which is the income ratio of the 95^th percentile to the 20^th percentile of earners). Big cities, attracting both high-wage industries like finance and technology, and with high costs of living, are far more likely to have big earners than smaller Midwestern cities. And that, in and of itself, is not a bad thing. The economy is not zero-sum game.

However, the Brookings study points out the issues that will plague cities with a large gap: a narrow tax base, and issues making housing affordable for all residents. Perhaps one of the most important for a city’s future, a city with high income inequality will “struggle to maintain mixed-income school environments,” limiting the opportunity of lower-income students. And its these cycles of poverty and limited opportunities that exacerbate inequality issues generation after generation.

In fact, those issues bring up an entirely different consideration. A city with lower income inequality may simply be excluding the poorest families who cannot even afford to reside in the city limits. Without adequate housing options, and decent schools, cities will push many people out to suburbs or exurbs. This will leave only those willing to pay premium rents and private school tuition and obscure the measure of income inequality.

So, is income inequality being driven by the rich getting richer or the poor getting poorer? Like everything in life, it's both.

Compared with the U.S. average, the 50 biggest cities have the bottom 20^th percentile of households earning 10% less. That drops their income from $20,968 to $18,137. And cities are typically more expensive to live in than outlying areas, so that reduced income may in fact represent even less purchasing power. The 95^th percentile of households earns about $5,000 more in big cities than the U.S. average. However, that’s an increase of only about 2.5%. So both upward trends by the rich and downward trends by the poor contribute to income inequality in big cities. But that 10% drop is much more significant when you start off at only $20k.

For your reference: the three cities with the lowest 20^th percentile incomes: Miami at $10,438, Cleveland at $9,432 and Detroit at $9,083. The three cities with the highest 95^th percentile incomes: Atlanta at $279,827, D.C. at $290,637 and San Francisco at $353,576. I’m very happy for those doing well, wherever they live. But I am distraught and taken aback that we host cities where one in five households make $10k or less.

So what do we do about income inequality? Can the mayors who have signed on to tackle it accomplish their goals through smart urban planning? The optimist in me certainly hopes so.

Educational opportunities can go a long way toward breaking cycles of poverty. But even if smart, effective and radical policies are pushed through immediately, we’re talking about 15 or 20 years before we see long-term effects.

Housing takes up a much larger share of income than it used to, and in many cities is a force driving people out of city limits. Although I have a lot left to learn about truly effective urban planning—an amateur interest I have—housing would seem like a good place to begin. Although policies like rent control and public housing rarely work as intended, I wouldn’t be surprised to learn that there are new innovations in developing housing that works for both mixed- and low-income populations. Now is a good time to push forward with those ideas. 

Labeling GMOs

Labeling of GMOs is a contentious topic that has no doubt crossed your radar. It’s certainly beyond the scope of a single blog post. But I wanted to respond briefly to an article I saw recently in NPR’s food blog, The Salt. The article describes how food manufacturers, led by the Grocery Manufacturer’s Association, are proposing a voluntary labeling standard to the FDA. The catch? In addition to having labeling of GMOs be voluntary (as it currently is in the United States), it proposes to prevent states from issuing their own regulations.

I do not think that labeling GMOs is a useful exercise. Generally, we want to put labels on foods that provide useful information to consumers about the health and contents of the food. I am of the opinion that labeling something as containing GMOs is not providing information about the health of the food nor meaningful information to separate it from non-GMO food. There are no substantial health concerns over genetically modified foods simply because they have been modified by genetic engineering. This is a stance supported by the American Medical Association, the World Health Organization, the American Association for the Advancement of Science, the European Commission and the Food and Agriculture Organization of the United Nations.

This is all besides the fact that there is effectively a labeling standard in the United States already. It’s called Organic. Foods labeled Organic cannot contain ingredients from genetically modified foods. If you are buying Organic food, it is GMO free. If you are buying any other processed food in the United States made with corn, soy or canola oil—in addition to animals fed these products—you are buying GM food. As of 2010, 85% of corn and 91% of soybeans planted in the U.S. were genetically modified. These are the major ingredients both in animal feed and processed foods that line the middle aisles of grocery stores. It includes the corn syrup that’s in everything, soy oil, and a bunch of those seemingly random ingredients like xanthan gum and dextrose. (Organic meat must come from animals fed Organic feed).

This does not include sweet corn. The corn and soy discussed here are “commodity” crops and not typically meant for direct food consumption.

All that said, I don’t really believe the food manufacturers when they complain about the costs of labeling. There is something to be said for the costs of keeping up with the sources of ingredients. But as I mentioned above, it’s pretty clear that if a major food company (think Kraft) is sourcing corn or soy from the United States, it is GMO.

I have two main concerns with the voluntary standards. First, they’re voluntary. Even coming from the position that GMO labeling does not provide particularly useful information, having an industry regulate itself is just a silly exercise. We all know they won’t. Conflict of interest and all that. 

Second, the idea of imposing a ban against state-specific labeling standards seems premature. Yes, the FDA requires nutritional labeling and states cannot override that. And yes, it would actually be costly to coordinate fifty different labeling standards. But one of the great things about the United States is the federalist system that gives states a significant amount of autonomy. That means states can choose to test new ideas and new regulations. It means that marriage rights are extended to gay citizens much sooner than if the House and Senate had to decide on it. And it means that sometimes states go too far and over-regulate. Or list every damn thing as known-to-the-State-of-California-to-cause-cancer. That’s the price we pay for governmental innovation and trial-and-error.

If people decide they want to label GMOs, do it right. Voluntary standards won’t get you anywhere. Most of the time, I think that labeling GMOs would push the debate in a different direction. I wish it wouldn't come as such a big surprise, but I think a lot of people would be shocked to know they've been eating GMOs for a while now. In the United States, GMOs are just food. And the cotton in your shirts. Almost every Hawaiian papaya. The chicken and beef and bacon you eat. The oil you splash in your pan. Maybe people would see that it’s not as fundamental a shift as it is often portrayed. 

FDA labeling standards

FDA on genetically modified food