November 08, 2024
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Study: New England has fastest income gap growth

BOSTON – The gap between rich and poor grew at a faster rate in New England than in any other region of the nation over the last 15 years, according to a University of New Hampshire study released Thursday.

The widening income gap has shrunk New England’s middle class and disrupted many of the region’s communities, according to the study’s authors from UNH’s Carsey Institute.

“Diverging household incomes can fray the social fabric as social connections and the opportunities for families to mix with members of different classes diminish,” said Ross Gittell, a management professor and the study’s co-author.

The study found New England experienced the biggest increase in income inequality from 1989 to 2004, among eight regions nationwide based on Census data and a statistical tool that measures changes in income distribution among populations.

Over the 15 years studied – a period when income inequality grew nationwide – New England’s income growth among people with the highest income outpaced the nation, while income losses among the poorest exceeded the national average.

For example, inflation-adjusted household income for the top 20 percent of New England’s population rose 20 percent over 15 years, reaching $185,000. For those in the bottom 20 percent, income fell 5 percent to $12,437.

The trend’s effects are easy to see in many of New England’s urban communities, including Somerville, a city of about 78,000 just north of Boston.

Somerville was largely a working-class community before economic growth in the Boston area rapidly pushed up property values, pricing many people of modest means out of the market.

“It can have a positive impact on the housing stock, and how properties are maintained,” said Paul Mackey, a lifelong Somerville resident and deputy director of the city’s public housing authority. “But there’s been a negative – we’ve lost our middle class.

“We have an elderly population that is poor,” he said. “They’re long-term residents, and they need help paying for housing.”

Meanwhile, “working poor” residents with relatively low-paying jobs end up moving out because there are no houses they can afford, Mackey said.

Similar trends have been playing out in Portsmouth, a coastal New Hampshire community where Bryan Wyatt moved two years ago in part to flee the Boston area’s high cost of living and a difficult commute.

Portsmouth’s downtown neighborhoods were once filled largely with working families.

“But now, there’s a downtown of essentially tourists and outsiders, and the residents of the city don’t necessarily mingle with them,” said Wyatt, director of The Housing Partnership, a regional housing agency in Portsmouth.

Meanwhile, some of New England’s small towns and rural areas are drawing people who work in the city and accept long commutes because they can’t afford urban housing prices, Wyatt said.

“The market is only producing housing for the upper income brackets, and they’re not producing rental housing at all,” Wyatt said.

Tuesday’s report on income disparity ranked the Pacific region No. 2 behind New England in growth of the gap between rich and poor, followed by the Mid-Atlantic states in third.

Among states, Connecticut, Massachusetts and Vermont all ranked among the top five nationally for increase in income disparity. And New England accounted for six of the top 20 metro areas for growth in income gap: one in New Hampshire (Nashua), one in Massachusetts (New Bedford), and four in Connecticut (Stamford-Norwalk, Bridgeport, Waterbury and Danbury).

The report’s authors attribute New England’s growing income gap to large economic forces. Many manufacturers have moved to less expensive areas and overseas, leaving fewer jobs in New England for people with relatively few skills. Meanwhile, New England has seen rising demand for highly skilled workers in technical fields.

“These shifts were more pronounced in New England because of the region’s highly educated population, strong research and development base, and relatively high cost of business operations, which pushes low-skilled jobs elsewhere,” Gittell said.

On the Internet: Income disparity study, University of New Hampshire’s Carsey Institute: http:///www.carseyinstitute.unh.edu.


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