Once again, Atlanta is ranked No. 1 for income inequality

The gap between the city’s rich and poor remains the highest in the country. Here’s why that matters for middle class city dwellers—and suburbanites.

A new report on income inequality in the United States is out, and once again Atlanta ranks as the city with the highest gap between rich and poor. To any civic boosters who downplay these findings, I issue an open invitation to join me on my daily commute on the new Atlanta Streetcar. On my way to the trolley stop in the morning, I pass a boarded building on Jackson Street where people sleep in the doorway. I later disembark at Peachtree Center, passing lawyers, bankers, and developers headed into shiny skyscrapers. While riding, I have overheard some fellow passengers debate the relative merits of local soup kitchens and others discuss the gourmet options at Krog Street Market. Such examples exist all over the city. There’s the obvious contrast between the verdant lawns of Buckhead and the blight of English Avenue. There’s the more nuanced discrepancy between the Village of Bedford Pines subsidized housing development on Boulevard (average annual income: $3,000) and the new apartments a half mile away at Ponce City Market (starting monthly rent for a three-bedroom: $3,279).

The report, issued this week by the Brookings Institution, updates a study released in 2014. In both cases, researchers compared the incomes of the highest-earning 5 percent of a city’s residents with those in the lowest fifth. The richest Atlanta households earn almost 20 times more than the city’s poorest residents: $288,159 compared to $14,988.

“The recession in Atlanta was particularly brutal for everyone—rich and poor, city and suburban. The housing market took a beating and dragged the whole metropolitan economy down with it,” says Alan Berube, a senior fellow at Brookings and one of the report’s co-authors. “The region is now recovering, but rather unequally.”

Copy of City Inequality 2013 Figures Tables and Appendix (EditedAs the gap grows between the rich and poor, what does this mean for the middle class? It shrinks. Higher-earning residents move into housing that gets ever more expensive and scarce while the poor remain stuck in subsidized housing or blighted areas. This leaves the middle class with few options but to move outside the city limits. Of the 50 cities studied, Atlanta had the sixth lowest middle class population—32 percent. Only Cleveland, Miami, Detroit, San Francisco, and Washington D.C., had smaller percentages of middle-class residents. (The study defined middle class as households with incomes between $40,000 and $100,000).

The implications reach far beyond housing. “The further apart a city’s rich and poor are, the less likely they are to share neighborhoods, share schools, and benefit equally from public services—all things that I’d say are important for helping low-income residents reach the middle class over time,” says Berube.

While the perception persists that poverty is an urban problem, a 2013 Brookings study showed that poverty in metro Atlanta’s suburbs increased at a dramatic rate—159 percent between 2000 and 2010. Berube, who also co-authored that study, has referred to metro Atlanta as an “epicenter” in the national trend of growing suburban poverty. Housing prices reflect these demographic shifts. Home purchase and rental rates are creeping up in the city, making it less affordable for poor and working-class residents. This is one reason poverty is on the rise in the suburbs, especially the closer-in areas dotted with 1950s and 1960s ranches. You now can find cheaper rents in Cobb County than Kirkwood.

The trend of wealth increasing in the city while poverty rises in the suburbs is likely to continue in metro Atlanta. “Higher-income households have benefited from job gains in industries like health, information, and professional services, which also tend to be located in the city of Atlanta. Employment gains have lagged in industries that employ less-skilled workers, such as construction, manufacturing, and logistics, which tend to be located in the suburbs,” says Berube. “These trends could help explain still-wide inequality in the city of Atlanta at the same time that poverty remains stubbornly high in the suburbs.”