Economy League: Income inequality worsens in city

With recent discussions of wealth inequality in Philadelphia, as well as a possible wealth tax, it seems timely to measure the city’s levels of income inequality. For this Leading Indicator, we highlight the time-tested Gini coefficient to explore how Philadelphia’s income inequality compares with peer cities as well as across local residential groups.

What You Need to Know

    A staple measure of income inequality, the Gini coefficient ranges from 0 to 1 where “0” indicates perfect equality while “1” signifies complete inequality.

    As of 2020, Philadelphia has a Gini coefficient of 0.52 – having grown from 0.49 in 2010. Thus, Philadelphia’s income inequality is growing.

    For the past decade, Philadelphia’s Gini coefficient has slightly outpaced the national average, indicating that Philadelphia’s income inequality is greater than that of the U.S.

    When compared among the 15 largest U.S. cities in 2020, Philadelphia is both the sixth largest city by population and has the sixth highest degree of income inequality.

    New York City claims the highest degree of income inequality in 2020 with a Gini coefficient of 0.55, while Columbus, Ohio had the lowest Gini coefficient of 0.44.

    Philadelphia’s legacy as a historic industrial city that transitioned to a service-based economy is a major contributor to its income inequality.

    As of 2020, roughly 30.9 percent of Philadelphia households earn between $10,000 and $40,000 a year while only 5.4 percent earn $200,000 or more annually.

    Philadelphia’s households of color make up roughly 73.1 percent of households earning less than $10,000 a year while only comprising 25.4 percent of those earning $200,000 or more.

    Roughly 39.4 percent of Philadelphia’s Latinx/Hispanic households earn $10,000 to $40,000 a year.

For more analysis, go here.