Yesterday, the Post published an analysis of recent data from the U.S. Department of Labor which highlights differences in wage gains across income brackets over the past two years. The key trend discussed in the piece is that while Washington area incomes have increased across the board since 2003, increases in the lower brackets trail those in higher brackets significantly, making life difficult for low income workers and families in the metropolitan area.
The differences are not hard to explain; in an area where knowledge industries are growing at phenomenal rates, the demand for highly skilled workers is intense, and compensation for those workers has been bid up accordingly. In industries where extensive education and specialization are not requirements, labor saving technologies and global competition have retarded wage growth. The Post notes, for instance, that while middle and upper income compensation has increased by around 10 percent in the Washington area over the past two years (over twice the national average), wage growth for the lowest income bracket has increased by only 5.4 percent (compared to 3.4 percent for the nation as a whole).
What is more difficult for urban planners is how best to address the issue. Many of the most desirable soutions for improving the lives of low income workers — increased access to affordable healthcare and higher or continuing education, say (or any affordable access at all, to those in jobs which do not provide such benefits) — are best pursued at the national level. Attempts in the last century by metropolitan areas to pursue such redistributionary programs helped to push higher income residents from cities to suburbs and from the Northeast and Midwest to Sunbelt states, leaving many cities at the brink of bankruptcy in the process. The problem is one of incentives. Higher income residents facing larger tax burdens move outside the area subject to the programs, while lower income residents are more likely to concentrate there, seeking assistance. The result is an eroding tax base that reduces the fiscal foundation of the city in a vicious cycle.
More modest solutions are certainly available, such as efforts to provide subsidized housing for low income workers, but require regional coordination to be effective. It is important for Washington, Maryland, and Virginia to produce plans together; otherwise development will simply shift towards municipalities that opt to do little or nothing, rewarding wealthy residents with low taxes and leaving the problem of increasing income inequality to other jurisdictions..
