Inequality, Left and Right
In our work at Fourth Economy, we focus on helping communities to identify and counteract inequality in its various forms. Therefore, we often find ourselves working in areas of proximate extremes — where two or more nearby areas present stark differences in concentrations of wealth, demographics, or economic activity.
That we live in a land of pronounced inequality cannot be news to many of you. Economists, politicians, and social commentators of all stripes have, in various ways, been drawing greater attention to issues of inequality for years, and especially during the last decade.
to what extent does your ZIP Code determine your destiny?
In one of the most read and cited academic papers published in that time, the uncommonly-famous-for-an-economist economist Raj Chetty and his colleagues discussed the declining “American Dream” by exploring the variation in income mobility across the US. That landmark work generated enormous research momentum, leading to other work such as this Brookings Report, and today Opportunity Insights (Chetty’s current organization) is just one of a number of groups studying inequality across the US.
One particularly memorable turn of phrase has come to embody the question at the heart of this work: to what extent does your ZIP Code determine your destiny?
Generally, studies that have sought to analyze place-based inequality have looked at the divergence between different cities or regions — Minnesota, for instance, versus Mississippi. But, as Dr. Chetty has pointed out, disparity is often a highly local phenomenon.
That’s certainly true in the city where I live, Pittsburgh, and it’s true in many places around the country. But, I wonder, where is it most true? And that brings me to the point of this blog post. I’m going to pose, and attempt to answer, a simple question: where in the US are the two most unequal neighboring ZIP Codes?
Take some time to consider your guess...
While you do, let me clarify a few points. In order to answer this question, I’ll explore data for all ZIP Code Tabulation Areas in the fifty US states and the District of Columbia.
For each ZIP Code area, I’ll look at the median household income as reported by the American Community Survey (ACS), based on estimates from 2014-2018.
Because ACS data come from sample surveys, I will exclude more sparsely populated ZIP Code areas with fewer than 200 households, to avoid estimates with high margins of error. (This leaves 26,305 ZIP Code areas for which data are available.)
I will consider any ZIP Codes that share any point on their borders to be neighbors.
Finally, I will compare neighboring ZIP Codes in two ways:
The total dollar difference in their median household incomes.
The percentage difference between their median household incomes.
One last process note: median household incomes for very high-income areas are topcoded, meaning that the very highest are listed as having a median of $250,000, even though the actual value is higher. Because the actual data is not available, I will begrudgingly use the top coded values in my analysis.
Okay, are you ready for the answers?
Greatest Total Dollar Difference
The greatest total dollar difference in median household incomes between neighboring ZIP Codes falls between 94027 and 94063. 94027 (Atherton, CA) is one of the highest-income areas of the country. It is home to several household names — including Eric Schmidt, Sheryl Sandberg, and Steph Curry — and is among those with a topcoded Median Household Income of $250,000. 94063, meanwhile, covers part of Atherton’s northern neighbor, Redwood City. The median household income there is about $71,500, still much higher than many places in the country, but the relative difference is nonetheless striking. And, given the extremely high cost of living, many residents of 94063 face unaffordable living conditions. One piece of evidence: in that area one in three homeowners and two in three renters face a housing cost burden.
Finally, I feel I would be remiss to not point out that this most-unequal of adjacencies (at least in total dollars) exists a few miles north of Stanord University’s campus — home to, among other impressive people and organizations, the Stanford Center on Poverty and Social Inequality, where Dr. Chetty used to work.
Okay, I bet some of you more or less guessed that answer. The Bay Area has become synonymous with booming wealth, gentrification, and inequality in recent years, and the data reinforces the truth of that narrative. But let’s now turn to the second question — which is, to me, the more interesting version.
Greatest Percentage Difference
The greatest percentage difference in Median Household Income between neighboring ZIP Codes falls in Arizona, south of Phoenix and Tempe, between ZIP Codes 85226 and 85121. 85226 is a wealthy suburban area with a golf course, a mall, and no fewer than five residential subdivisions whose names include the word estates. It has a median household income of $85,300. Its catty-corner neighbor to the southeast, 85121, is located within the Gila River Indian Community. The majority of the population of the area are Native American or Indigenous people. Its median household income is under $9,000 per year, among the lowest in the country.
Now, I’ll grant you, my analysis came with a lot of caveats — not least of all, that I excluded more sparsely populated areas. But if you accept the premise, it leads to an interesting statement. In a state that can already lay claim to some of the country’s most famous geographic intersections, there is a point in the Arizona desert, on the median of Highway 347 (a.k.a. John Wayne Parkway), that can lay claim to the unfortunate title of Most Unequal Point in the United States. Stand there, and the median household income of the area to one side is 10 times greater than that of the other side.
Someone should put up a sign.
I don’t mean to make light of a serious and complicated issue. While this exercise feels playful, my underlying point is not.
How does the area where you live compare to its neighbors? I suspect we will hear more about inequality in the coming years. But will we do a better job of noticing it? In many places, all one need do is look around.