Inequality, a growing social and political issue in the United States, has become particularly acute in the industrial Middle West.
This makes sense, considering the transformation of the industrial economy that once supported millions of middle-class jobs across the region. But new statistics show that this perception is reality, with inequality growing particularly fast in such states as Illinois, Ohio, and Michigan.
The statistics come from the Martin Prosperity Institute (MPI), the Toronto-based home of urbanologist Richard Florida, and they appear in one of the articles that Florida writes regularly for The Atlantic Cities website. The site, and Florida’s thoughts, contain some of the most useful writing on urban issues today.
Much of the growing inequality in the Midwest can be blamed on the usual suspects—the rich are getting richer, the poor are getting poorer, the 1 percent is outpacing the 99 percent, the uneducated are out of luck, and the middle class is vanishing. All this is true, the MPI says, but it’s pretty much true everywhere. So they ask: why is inequality growing faster in some places than in others?
Their answer: the very factors that can lead to success in the globalizing world—especially urban density and economic clustering—also lead to growing inequality. In other words, maybe you can’t have the good without the bad.
It’s a provocative thesis, especially since Florida concludes that the solution may not lie in the market but in politics—in a new “social compact” focused on supporting those at the bottom.
The MRI report consists of two snapshots—inequality in 1979 and inequality now. The year 1979 is a good place to start because the late ‘70s are the place where most American wages began to stagnate and inequality began to grow, after more than 30 years of rising incomes and shrinking gaps between the rich and the poor.
In 1979, the map shows, the greatest inequality was found in the Deep South—Arkansas, Louisiana, Mississippi, and Alabama, with their plantation-based economies and extreme poverty. The least inequality was found in states like Illinois, Wisconsin, Indiana, Michigan, Ohio, and Iowa.
By 1989, inequality had begun to grow in the Midwest, as industry fled. This pattern has increased since then, with inequality much more widespread by 2012, the latest year charted.
Southern states, burdened by their legacy of poverty, are still among the most unequal, but have been joined by New York, Massachusetts, California, and Texas. Then come Midwestern states—Illinois, Michigan, Ohio, and Missouri—on the second rank of inequality.
The least unequal, as they always have been, are Wyoming and Utah.
Then the researchers looked not at the inequality itself but the growth. The Deep South is still very unequal but, statistically, inequality there has barely grown since 1979. In other words, they’re bad but no worse than they ever were.
By contrast, the states exhibiting the greatest growth in inequality—not the greatest inequality but the greatest growth in inequality—are lumped in the Midwest and the Northeast. This list includes California, but it’s a geographical outlier. The states where inequality has increased most sharply since 1979 are Illinois, Michigan, Ohio, Pennsylvania, New York, and Massachusetts.
Well, this is quite a grab-bag. Inequality may be the only thing that New York and Mississippi have in common. You’d think that states like Michigan and Ohio, with their impoverished old factory towns, would at least be more equal in their growing poverty. And why are Utah and Wyoming, not exactly economic powerhouses, nevertheless relatively equal?
The MPI researchers chewed the statistics. They noted that the states with the greatest growth in equality, except for Ohio, all have robust knowledge economies, which is supposed to be good.
Was it the growth in incomes and wealth for the richest Americans, the notorious 1 percent? Yes, that plays a role, but that’s true in almost all states.
Certainly, it would seem that much of the reason would lie in the departure of good blue-collar jobs, the disappearance of the middle class, and the much-discussed divide between low-skill jobs and higher-paying knowledge work. Again, this is true, but the MPI report said that just having a college degree—their definition of high-skilled knowledge workers—didn’t account for the difference between states.
More important was the growth in the number of workers at the bottom. The share of the population without a high school degree played a role in relative inequality.
But the real cause for growing inequality is the nature of the states themselves, MPI said. Inequality is growing fastest in the biggest, most populated, and most densely populated states. What’s more, inequality is growing especially fast in the biggest, most dense cities.
At first, this makes little sense. Authors such as Edward Glaeser have pointed out that it’s precisely these big cities, with their density, that are the incubators of innovation, clustering, and entrepreneurialism. If the American economy has a future, it’s in these cities and their states.
MRI said that’s just the point. These cities are indeed the hothouses of today’s economy. So they are magnets for the high-fliers who are best placed to take advantage of this vitality. Today’s big earners cluster in cities and drive up its top wages.
But at the same time, many of these places were industrial cities that have lost their factories. As jobs at the top grow, jobs in the middle disappear. What’s left are lots of low-wage jobs.
If this new economy is creating a new class system, these cities are where it’s most on display. These cities simply have more of everybody—the new rich, the declining middle, and the persistently poor.
As the MPI people recognize, this is the rub. Urban density creates economic vitality. The economy really needs big, dense, entrepreneurial cities. This is where the action is.
But at the same time, and for the same reason, these cities are the leading producers of inequality.
Can you solve the inequality without sacrificing the vitality? That may be the leading economic and political question of our time.
Florida and other experts are disinclined to leave this to the free market which, after all, has created the problem. Voices are growing for political solutions instead. Florida cites the need for a stronger safety net, and the upgrading of low-skill, low-pay service jobs. The battle over higher minimum wages is part of this debate. So is the push for stronger unions or other forms of worker protection. So is the consensus that all workers probably need some post-secondary education.
As the MPI maps make clear, this is yet another issue dividing blue and red states. The growing inequality is mostly a blue-state issue, involving California, the upper Midwest, and the Northeast—and especially their big, Democratic-voting publics. The fact that they are the drivers of our 21st-century economy means they also have to deal with the fallout. Utah and Wyoming and states like them may add little to that economy, but they also have relatively low inequality and so have less incentive to seek a solution.
We know what needs to be done, and the MPI study gives us another reason to do it. But it doesn’t solve the political roadblock to getting it done.