Atlanta ranks 3rd in income inequality; top tier earns 17.5 times more than bottom

By David Pendered

A new report from Brookings Institution shows the city of Atlanta ranks third in the nation in terms of income inequality. The top 5 percent of households earns 17.5 times the income of the bottom 20 percent of households.

Buckhead shops, such as Tiffany & Co. in Phipps Plaza, cater to Atlanta’s top tier in terms of household income. Credit: simon.com

Atlanta’s lower economic rung has lost 18 percent of its income since 2007. The upper rung has lost 8 percent of its income in the years since the start of the Great Recession, according to the report released Jan. 14.

Brookings derived the figures from an analysis of the 2014 American Community Survey, which is conducted by the Census.

Brookings measured the gap between households at the top and bottom ends of the spectrum of household income. Brookings calls the formula the “95/20 ratio.” All dollar amounts were adjusted for inflation to 2014 levels.

In Atlanta, household income at the 95 percentile is $281,653. Household income at the 20^th percentile is $16,057.

These incomes provide a ratio of 17.5, meaning the top 5 percent of households earn 17.5 times the income of the bottom 5 percent of households. The rate for all big cities was 11.8

In one category the report breaks out, households in the 20^th percentile spend 48 percent of their income on rental housing. Rental costs were $7,769.

Atlanta is part of a national trend of income inequality growing in major cities.

Both high- and low-income households are earning less than they did in 2007. But more low-income households earned less than did the high-income households. Here’s how the Brookings report described the situation:

“High-income households earned significantly less in 2014 than in 2007 in 33 of the 100 largest metro areas, but the same was true for low-income households in fully 81 of those metro areas….
“In fact, only two cities—Denver and El Paso—had 20th percentile incomes significantly higher in 2014 than in 2007.”

The authors of the study are Alan Berube, senior fellow and deputy director in the Metropolitan Policy Program, and Natalie Holmes, senior research assistant in the Metropolitan Policy Program.

Atlanta trailed the cities of Boston and New Orleans in terms of income inequality.

Atlanta's low income residents pay 48 percent of their income on rent for housing, according to Brookings Institution. File/Credit: Kristian Weatherspoon via marketplace.org — Atlanta’s low income residents pay 48 percent of their income on rent for housing, according to Brookings Institution. File/Credit: Kristian Weatherspoon via marketplace.org

Boston ranked No. 1 with an income inequality rate of 17.8. The bottom 20 percent earns a household income of $14,942, due mainly to the high number of college students in the area, according to the report. The top 5 percent earns a household income of $266,224.

New Orleans ranked No. 2 with a rate of 17.7. The bottom 20 percent earns a household income of $11,466. The top 5 percent earns a household income of $203,383.

The figures for metro Atlanta present a brighter picture. Metro Atlanta ranks 36^th out of the nation’s 100 largest metro areas.

The income inequality rate was 8.8. This is lower than the rate of 9.7 for the 100 largest metro areas.

The bottom 5 percent earned a household income of $24,407. The top 5 percent earned a household income of $213,807.

As a region, the bottom 5 percent lost 19 percent of household income from 2007 to 2014. The top 5 percent lost 8 percent. Both changes are statistically significant at the 90 percent level.

The bottom 5 percent spend 36 percent of their household income on rental housing. That translates to a figure of $8,904.