Despite economic gains, America's largest metros are seeing spikes in inequality.
The Great Recession may have officially ended in June 2009, but the weak and sluggish recovery has left many Americans struggling with the effects of a down economy years later, as evidenced by today’s release of 2011 American Community Survey data on poverty and income. The local level data reveal an uneven recovery that had not gained enough traction in 2011 to turn the corner on these trends.
Even as the economy achieved a net job growth of 1.9 million private-sector jobs in 2011, the upward pressure on poverty in the nation’s largest metro areas continued. After jumping from 11.6 to 14.4 percent in the span of a decade, the poverty rate for the country’s 100 most populous metro areas climbed further still between 2010 and 2011, to reach 15.1 percent.
However, there are signs of easing. The increase in 2011 was the smallest uptick in the 100 metro area poverty rate since the Great Recession began—0.7 percent compared to a 1.1 percent increase the year before and a 1.4 percentage point rise the year before that. The number of individual metro areas where the poverty rate increased significantly also dropped. Between 2010 and 2011, just over one-quarter (26) of the nation’s 100 largest metro areas registered a significant rise in the poverty rate—led by McAllen, Texas; Modesto, California; Bakersfield, California; Albuquerque, New Mexico; and Toledo, Ohio—compared to 47 regions in the previous year. Increases generally persisted in Southwestern and inland California metro areas where the housing market is struggling to regain its footing, and in Midwestern and Northeastern metro areas still shaking off the effects of steep manufacturing job losses during the recession. Only one metro area—Grand Rapids, Michigan—managed a decrease in its poverty rate, after a decade in which it climbed almost 8 percent.
By 2011, 30 million residents in the nation’s 100 largest metro areas lived below the federal poverty line. That represents an increase of 1.7 million people over 2010, or a growth rate of 5.9 percent. As in previous years, that growth skewed toward suburbs. Suburban communities in the nation’s largest metro areas saw the poor population grow by 6.8 percent compared to a 4.7 uptick in cities, and accounted for almost two-thirds of the increase in the metropolitan poor population (63.4 percent). As was the case in 2010, 55 percent of the metropolitan poor lived in suburbs in 2011, which translates to 2.6 million more poor residents in suburbs than in cities.
The slowing of poverty’s upward trajectory signals a promising—if stubbornly slow—response to the recovery that began to take hold in the wake of the Great Recession, though the soft job market that has prevailed since the recession ended and the unevenness of that recovery can be seen in other troubling income trends. Between 2010 and 2011, 25 of the nation’s largest metro areas experienced a significant increase in income inequality (as measured by the Gini index), compared to 11 regions the year before. Increasing inequality affected a diverse array of regions, from metropolitan Atlanta, Chicago, and San Francisco to Kansas City, St. Louis, and Louisville. In each of these regions, inequality grew alongside rising poverty and falling incomes.
In 2011 the typical household’s income fell in real terms in 33 of the 100 largest metro areas, with decreases ranging from 2.4 percent in New York City’s metro area to as high as 10.7 percent in metropolitan McAllen. Compare that to the previous year when just 10 regions saw median income decline. On the whole, from the onset of the Great Recession to 2011 real median income dropped in the vast majority (88) of the nation’s 100 largest metro areas.
It is important to note that these numbers do not fully reflect the benefits of policies and programs that have been shown to help low-income families weather difficult economic times, like the Earned Income Tax Credit or food stamps. But they offer important indicators of how regions across the country have fared through the ups and downs of the economic cycle. Even with net job growth and more people working full time in 2011, metropolitan poverty continued to edge upward and expand its reach into suburbia. More regions saw inequality rise and household incomes fall. These trends underscore the continued impact of the worst downturn since the Great Depression from which the country has yet to recover fully. In the current environment, the ability to use employment as a path out of poverty is complicated by the weak recovery, and looming federal budget cuts threaten to ratchet back programs that have proven effective at buffering working families from the worst effects of a down economy.
Top image: Men look for work while standing along street corners in Brooklyn, New York on April 3, 2012. Photo by Eduardo Munoz/Reuters