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Why inequality matters

As noted here before, poverty and income inequality are not one and the same. While Rochester has one of the highest poverty rates in the nation, it has not ranked among the most unequal cities and metropolitan areas.

This remains true, according to a new Brookings Institution analysis of recent census data. Brookings looked at the difference between incomes for households earning more than 95 percent of all others and for households earning more than only 20 percent, and then generated a “95/20” ratio. Rochester ranked 53rd of 97 large cities in 2014, or just below the midpoint.

Our upstate peers—Buffalo and Albany—were 20th and 28th. And in terms of improvement from 2007 to 2014, Rochester placed 76th, versus 56th for Buffalo and 50th for Albany.

What’s more, while cities tend to be more unequal than metropolitan areas, the Rochester region fared worse among its peers: It ranked 78th out of 100 metro areas in the Brookings study. Buffalo was 63rd, while Albany was 93rd.

In an analysis of 2012 data by real estate Trulia, metropolitan Rochester ranked 44th, so it’s probably best to not put too much stock in any single study. Moreover, a close look at the census data suggests that lower-income residents here have made gains in recent years.

The median household income of the lowest 20 percent of city households fell some 6 percent from 2006 to 2011, but from 2011 to 2014, it jumped more than 27 percent. By contrast, for the top quintile, median household income rose some 9 percent. In Monroe County, the story is similar.

But there’s still ground to make up: Over a longer time frame, from 2006 to 2014, the wealthiest 20 percent enjoyed the biggest gains.

Income inequality is a complex issue, and make no mistake: Some disparity is inevitable and can spur economic activity. But too much of a gap between rich and poor can have the opposite effect.

By helping lower-income workers to get the skills needed to land better-paying jobs, we can narrow the gap and lift more residents out of poverty.

2/19/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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