Behind the Metric: A Starter Guide to Income Inequality

• Income inequality has been increasing in the United States. Many low-income families live in nearly exclusively low-income communities, and high-income families in high-income communities

• Low-income communities experience disproportionate hazards to their health and in their social and physical environments

• Use the Dashboard’s income inequality metric to compare neighborhoods, strengthen the local case for economic development, and target resources to neighborhoods that need them most

A widening gap-  income inequality shows cities are becoming more economically segregated Politicans have been talking about income inequality a lot recently. And that is a good thing, since it’s been increasing across the United States. Right now, the richest 1% of Americans own 40% of the nations wealth, more than at any time in the past fifty years. Just a few weeks ago, freshman Representative Alexandra Ocasio-Cortez sparked headlines when she proposed a top marginal income tax rate of 70% for the nation’s highest earners as one possible solution to growing income inequality.  Most of the debate about this and other similar tax proposals focuses on jobs and impacts to the economy.  But problems associated with income inequality extend beyond wealth.

Income Inequality is bad for health and well-being Income inequality has been associated with negative health outcomes including less access to quality medical care, poorer mental health and shorter life expectancy. We also know that the places people live can shape their health and life opportunities; compared to affluent communities, areas of economic deprivation tend to have higher crime rates, worse air quality, and lower access to healthy foods. This issue is only getting worse, raising concerns about widening geographic gaps in people’s health.

How do we measure it? The Dashboard uses a measure called the Index of Concentration at the Extremes to identify each city and census tract’s economic position on a scale ranging from the most disadvantaged to the most privileged.

This metric can seem complicated so here are 5 tips to help you understand your community’s income inequality score and drive data to action.

1. This metric identifies areas as exclusively rich, exclusively poor, or somewhere in between.

2. The smallest possible score for a city or tract is -100. The biggest possible score for a city or tract is +100

   1. -100: Everyone is disadvantaged (income less than $25,000/year)

   2. A score of 0 can have one of two meanings. Either, disadvantaged and privileged people are present in equal numbers, OR everyone has an income between $25,000/year and $125,000/year.

   3. +100: Everyone is privileged (income greater than $125,000/year)

3. A city or tract can have any score between -100 and +100. Where a score falls on the number line tells us how extreme the differences in income are. For example, a score of -85 tells us that there are many more disadvantaged people living in an area. A score of +85 tells us that there are many more privileged people living in an area

4. A score just below 0 means that there are more disadvantaged people than privileged people, but not by much. A score just above 0 means that there are slightly more privileged people than deprived people

5. These scores can be used to gain a sense of the overall picture of income distribution or as a comparison tool with other neighborhoods and cities.

Harness our data and take action in your community The City Health Dashboard reports income inequality at both the city and neighborhood level with the goal that users will harness the power of this metric to create change in their neighborhoods and communities. Here are some programs and policies that can help reduce income inequality in your community:

• Job training & placement programs building digital literacy and computer skills, targeted at low-income communities, lower skilled workers, and workers in vulnerable sectors

• Affordable education opportunities for children from poor socio-economic backgrounds 

• Affordable housing and high quality public housing that allow for mixed-income communities

• Environmental justice laws requiring greater scrutiny of proposed environmental hazards in low-income communities and communities of color

• Public health interventions targeting low-income communities

• Investment in developing a city’s digital infrastructure, including increasing access to the internet

These are just a small sample of the strategies cities can use to address equity challenges and increase opportunities for all residents. Explore all of the Dashboard’s resources for taking action and let us know what’s working in your community by connecting with us on social media or emailing us at [email protected].

Interested in a more technical overview of this measure? Please see our Technical Documentation, Part 1.