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Wage Gap Widens in Golden State
New analysis of 2015 census data by Federal Reserve economists shows California cities experienced a more pronounced increase in wage inequality than in the metropolitan areas of other states. The Golden State claimed seven of the nation’s 15 slots on a ranking of the most unequal cities in a report titled “Why Are Some Places So Much More Unequal than Others?”
The largest gap in California cities between those at the top of the pay scale and those at the bottom was in San Jose, due to its large concentration of Silicon Valley technology jobs. San Jose ranked No. 2 nationally behind Fairfield, CT. Two other California cities, San Francisco (No. 8) and Los Angeles (No. 12), also ranked high on the list.
The fact that so many cities in the Golden State made the list is a stark turnaround from 1980, when only three were ranked among the top 15.
The authors of the report, Jaison Abel and Richard Deitz, economists at the Federal Reserve Bank of New York, wrote “We find that the most unequal places tend to be large urban areas with strong economies where wage growth has been particularly strong for those at the top of the wage distribution. The least unequal places, on the other hand, tend to have relatively sluggish economies that deliver slower wage growth for high, middle, and lower wage earners alike. Many of the least unequal places are concentrated in the Rust Belt.”
The authors note, “These differences in the degree of wage inequality are tied to powerful economic forces arising from technological change and globalization, which have pushed up wages strongly for high-skilled workers in locations that have become the most unequal. Yet those same forces have kept wage growth compressed within a fairly narrow range for workers in places that are the least unequal.”
For comments, questions or concerns, please contact Dennis Kaiser
