Thursday, May 12, 2016

Cities of rich and poor

It's happening everywhere in the country. But there once was a time when we talked about how proud we were to "buck the trend." What happened to that?
In cities across America, the middle class is hollowing out as more households move into either higher- or lower-income groups. New Orleans, Lafayette and Baton Rouge were among cities in a report that saw the biggest gains in upper-income residents from 2000 to 2014.

The widening wealth gap means fewer households remain in the middle, the Pew Research Center report said.

According to Pew, Lafayette and New Orleans saw an overall gain of 13 percentage points in the share of adults who were upper income. Baton Rouge had an 11 percentage point gain. The national average went up by 1 percentage point during the 14-year period.
So here is the interesting part as far as we are concerned.
Pew notes that the cities that had the largest percentage gains in upper-income jobs are heavily dependent on the energy industry, such as Odessa and Midland, Texas, which were tied at the top of the list with a 26 percentage point gain. Baton Rouge also has benefited from a boom in petrochemical construction, while Lafayette has seen more health care jobs and a burgeoning tech sector.

The energy sector has seen big hits since 2014 because low oil and natural gas prices have drastically reduced drilling activity.
So, when does it go bust? More importantly, when it goes bust, does that necessarily change the wealth inequality problem? My guess would be it does not. The boom times are when the real dynamism happens. We chose to direct the boom in such a way as to redistribute wealth upward. The bust times are just the stagnant period when the new bad status quo remains in place. Maybe we'll do better next time. Probably won't.

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