The Changing Shape of American Cities

Introduction:
The last two decades have brought dramatic changes to many American cities. Most cities in the United States in 1990 had a “donut” shape, with wealthier residents in a booming suburban ring surrounding a decaying core. Today cities are increasingly resembling what has been called a new donut – with three, rather than two rings. The center has grown much more desirable to educated, higher-income residents, especially young adults under the age of 35. Poverty, meanwhile, is migrating outwards, creating an “inner ring” of urban and early suburban neighborhoods around the core, where per capita incomes have fallen and education rates are stagnant. Beyond the inner ring, an outer ring of newer and larger suburbs continues to add population.

Source: Demographics Research Group, University of Virginia Weldon Cooper Center for Public Service.

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Financial Crisis and Increase in Income Inequality Across Cities

This paper investigates why the level of income inequality differs across U.S. cities. We also explore why some cities experienced faster increases in the level of inequality than others. Using the Decennial Census and the American Community Survey (ACS) from 1980 to 2011, we explore whether the disparities in the level and the changes in the level of inequality can be explained by MSA characteristics, including labor market conditions, skill distribution, residential mobility, racial concentration, industrial composition and unionization. We also examine how state level policies such as unemployment insurance benefits and minimum wage level is associated with income inequality.

Our findings shows that negative labor market conditions, concentration of skilled workers and racial segregation are positively associated with the level of income inequality. The level of inequality in these cities also tends to rise grow at a faster pace. While the minimum wage do not seem to have any association with income inequality, we find some evidence that the unemployment insurance benefit and percent of union members lower the increase in the income inequality.

Source: Association for Public Policy Analysis and Management

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The Equity Solution: Racial Inclusion Is Key to Growing a Strong New Economy

America is quickly becoming a majority people of color nation. At the same time, inequality is skyrocketing and racial inequities—from the homogeneity of the tech sector to the segregated suburbs of St. Louis—are wide, persistent, and glaring. Equity—just and fair inclusion of all—has always been a moral imperative in this country, but a new consensus is emerging that equity is also an economic imperative. Scores of economists and institutions like Standard & Poor’s and Morgan Stanley now believe that rising inequality and low wages for workers on the bottom rungs of the economic ladder are stifling growth and competitiveness, and that racial inequities threaten economic growth and prosperity as people of color become the majority.

This brief offers new research to inform the debate about equity and the future of the American economy. Using data on income by race, we calculate what total earnings and economic output would have been for the nation in 2012 if racial differ en ces were eliminated and all groups had similar average incomes as non-Hispanic whites. This analysis does not assume that everyone has the same income, rather that the income distribu-tions do not differ by race and ethnicity. We also examine how much of the income gap is attributable to wage differences versus employment differences (measured by hours worked). 

Source: PolicyLink

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How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay

Abstract: 

Do people from different countries and different backgrounds have similar preferences for how much more the rich should earn than the poor? Using survey data from 40 countries (N = 55,238), we compare respondents’ estimates of the wages of people in different occupations – chief executive officers, cabinet ministers, and unskilled workers – to their ideals for what those wages should be. We show that ideal pay gaps between skilled and unskilled workers are significantly smaller than estimated pay gaps, and that there is consensus across countries, socioeconomic status, and political beliefs for ideal pay ratios. Moreover, data from 16 countries reveals that people dramatically underestimate actual pay inequality. In the United States – where underestimation was particularly pronounced – the actual pay ratio of CEOs to unskilled workers (354:1) far exceeded the estimated ratio (30:1) which in turn far exceeded the ideal ratio (7:1). In sum, respondents underestimate actual pay gaps, and their ideal pay gaps are even further from reality than those underestimates.

Source: Perspectives on Psychological Science (forthcoming)

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