The Brookings Institution recently released a study examining the increasing level of income inequality in cities and metro areas across the country, with Boston topping the list.
Conducted by Alan Berube and Natalie Holmes, the study was released on Jan. 14. Alongside Boston, the study also ranked New York and San Francisco among the top ten cities for inequality. While causes of income inequality are varying and multifaceted, Berube shed some light on the possible forces behind Boston’s imbalance.
“Inequality tends to reflect, more than anything else, the economic structure of a city or metropolitan area,” Berube said in an email. “That is, the types of industries and jobs a place has produce the incomes its workers earn, and thus the disparities between its rich and poor residents.”
With some of its major industries including finance, scientific research and development and engineering, it’s no wonder Boston and the surrounding area employ large numbers of high-earning employees. According to William Dickens, professor of economics and social policy at Northeastern University, one of the main causes of income inequality is changing technology. More jobs become available for highly skilled workers, while unskilled workers lack the same opportunities. As more companies and businesses that require skilled workers move into an area, the demand for those workers drives up already high wages while driving down low wages.
This divide between skilled and unskilled workers is an issue that the city of Boston is actively engaged in tackling. Trinh Nguyen, director of the city’s Office of Workforce Development, explained several of the initiatives aimed at closing the income gap in both the short and long term.
“We see our department in helping the city make resources and programs as accessible to Boston residents as possible,” Nguyen said. “Economic growth is about inclusion and the aspiration to be part of that growth. You can only aspire to be part of that growth if you think you have a shot.”
Some of these efforts include collaborations with Boston Public Schools to encourage college application and completion, along with support from initiatives like Success Boston, aimed at providing students with the resources necessary to graduate from college.
Nguyen also explained the city’s redistribution of funding for job-training programs to create a more holistic career-building continuum. These programs focus on building a career path, so Boston’s citizens can gain the necessary skills for quality jobs while also receiving income support and connections for post-secondary education so they can continue advancing their careers.
In addition to the discrepancy in education level and skill training, the housing market may also be to blame for some of Boston’s equality problems.
“Our research shows that in cities that have higher levels of inequality, housing for low-income workers and families tends to be more expensive relative to their incomes,” Berube said in an email. “This may be because developers in unequal cities are, at least in the short term, more responsive to the housing demands of the wealthy than those of the poor.”
Construction of affordable housing presents another challenge, as development companies can struggle to turn a profit when tenants are paying lower rents, compared to the security of leasing to higher-paid residents.
Matt Pritchard, the president and executive director of HomeStart, Inc., an organization that aims to end and prevent homelessness, spoke further about this problem. “The landlords’ incentive is to generate as much revenue as possible and some people are able to pay more so that squeezes out people who have a very low income,” he said.
Pritchard continued to discuss the extremely narrow income margin that can result in someone becoming homeless. For someone living paycheck to paycheck, it just takes one isolated incident, like an argument in the home or the loss of a support system, for them to be left without a home.
Michelle Chausse, the director of communications at Rosie’s Place, a women’s homeless shelter, echoed this statement.
“We see women who are working, full time even, and who are just not making enough to make ends meet,” Chausse said. “One of the reasons behind their low earnings is income inequality and not being paid a fair wage for the jobs they are performing.”
While Chausse acknowledged that the state’s minimum wage is one of the best in the country, it’s still not enough to keep up with the rising housing costs and job competition. Nguyen also addressed the city’s commitment to fighting this problem, referencing Massachusetts’ plan to have an $11 minimum wage by 2017.
While there are many possible causes for Boston coming in as the city with the highest level of inequality and an even greater number of possible solutions, there is no quick fix. As Nguyen explains, it’s a structural problem that needs to be addressed in the long term.