The American middle class is shrinking. According to a report released earlier this year, an estimated 51% of the population was in the middle class at the start of the decade, down from 61% forty years earlier. It also appears that even as the economy recovers, jobs are being added for low-wage positions much faster. Despite economic growth in the United States, income inequality appears to be worsening nationwide.
The gap between the wealthy and the poor varies across the country. Some areas have much more extreme poverty, extreme wealth or both, and very little in between. Using data collected in the Census Bureau’s 2012 American Community Survey, 24/7 Wall St. examined the metropolitan areas with the highest Gini coefficient, a figure used to measure income inequality. A low Gini coefficient closer to zero means relative income equality. A higher Gini coefficient closer to one means a limited middle class and concentrated wealth or poverty. As of 2012, Sebastian and Vero Beach, Fla., had the highest level of income inequality in the country.
ALSO READ: The Five Worst Performing Stocks on the Dow
Click here to see the Cities with the Widest Gap Between the Rich and the Poor
It might be expected that a metropolitan area with high income would have very large populations of both extremely wealthy and extremely poor people, but this isn’t necessarily the case. To have an unequal distribution of wealth, cities only need to be very wealthy or very poor.
ALSO READ: The Most Dangerous States in America
This was the case in metro areas like Brownsville and McAllen, Texas, which have the highest and second-highest poverty rates in the country, respectively, as well as very high Gini coefficients.
At the same time, cities with high income inequality also included extremely wealthy areas like the Bridgeport-Stamford metro area in Connecticut, or the New York City metro area, which have among the wealthiest populations in the country. In the Bridgeport area, more than one in every five households earn more than $200,000 each year.
Both the extremely wealthy and extremely poor metropolitan areas with high income inequality have one thing in common: a disproportionate distribution of income among the wealthiest residents. Nationally, the top 5% of the population brought in 22% of all the income last year. In the Albany, Ga., area, the top 5% represented 27% of the area’s income. In the Sebastian-Vero Beach area, the wealthiest 5% accounted for more than one-third of income.
According to Urban Institute senior fellow Margaret Simms, another factor that may be contributing to income inequality in these areas is a high proportion of immigrants. In the Texas-Mexican border towns of Brownsville and McAllen, she explained, very low-wage manufacturing jobs are attracting immigrants to the region. These low-wage jobs contribute further to income inequality in these areas.
ALSO READ: America's Richest (and Poorest) Cities
Many of the areas with extreme income inequality are split between urban and suburban neighborhoods. The Bridgeport-Stamford area has some of the wealthiest suburbs in the United States. The poverty rate in its suburbs in 2012 was just 5.5% -- among the lowest rates in the country for suburbia. Meanwhile, the city of Bridgeport, which is much less well off, had a poverty rate of 17%.
To identify the metropolitan areas with the highest income inequality, 24/7 Wall St. reviewed the 10 areas with the highest Gini coefficient, as measured by the Census Bureau’s 2012 American Community Survey. We excluded those areas where the majority of counties had poverty rates considered to be significantly affected by the presence of college students. In addition to the Gini coefficient, we also used income, poverty and home value data from the Census Bureau. We also reviewed poverty rates in these metropolitan area’s urban and suburban areas, as estimated by the Brookings Institution. All data is for 2012.
These are the cities with the widest gap between the rich and poor.
10. McAllen-Edinburg-Mission, Texas
> Gini Index: 0.4977
> Median income: $33,761
> Poverty rate: 34.5%
> Pct. with income over $200,000: 1.8%
The McAllen metro area was one of the nation’s poorest last year, with a median household income of just $33,761. Additionally, nearly 35% of the population lived below the poverty line, trailing only the Brownsville metro area, while 36.8% of the population lacked health care. This exceeded every other metro area in the United States. Last year, McAllen’s wealthiest 20% of households accounted for 52.6% of all income. For most occupations, wages in McAllen were significantly lower than their nationwide averages. The area has strong economic and cultural connections with the Mexican city of Reynosa, where drug violence has been a major problem.
9. Brownsville-Harlingen, Texas
> Gini Index: 0.4980
> Median income: $30,953
> Poverty rate: 36.1%
> Pct. with income over $200,000: 1.8%
Last year, 12.6% of Brownsville area households had an income of less than $10,000, the highest percentage in the nation. Brownsville also had the nation’s highest poverty rate, at 36.1%, and the lowest median household income, at just $30,953. Brownsville is one of the largest metro areas on the border between Texas and Mexico, with more than 415,000 residents as of last year. Across the border from Brownsville is Matamoros, which has close economic ties to its Texan neighbors. Drug violence remains problematic in Matamoros, and recent economic data for the country has been mixed.
ALSO READ: Ten Cities Where the Poor Can't Get Rich
8. Miami-Fort Lauderdale-Pompano Beach, Fla.
> Gini Index: 0.5021
> Median income: $46,648
> Poverty rate: 17.5%
> Pct. with income over $200,000: 6.2%
ALSO READ: America's Worst Companies to Work For
The percentage of people living below the poverty level in the Miami-Fort Lauderdale area, one of the most populous metropolitan areas in the country, was slightly above the national rate, at 17.5%. But the region’s urban areas are significantly poorer -- the urban poverty rate in 2012 was 28.3%, compared to 16.3% in suburban areas. Income in Miami was greatly concentrated among the top-earning households last year, with the top 5% of households accounting for more than a quarter all income. According to a study conducted by a University of Central Florida economist, average annual wages in the region are expected to increase over the next few years, which could help curb income inequality.
7. Lafayette, La.
> Gini Index: 0.5035
> Median income: $46,813
> Poverty rate: 17.9%
> Pct. with income over $200,000: 6.1%
The Lafayette area has a higher proportion of residents both among the top earners and the very poor, although not to the same extremes that some of the other metro areas with high inequality have. The region’s poverty rate in 2012 was 17.9%, slightly higher than the national rate of 15.9%. An estimated 6.1% of households brought in $200,000 or more, just barely higher than the national rate of 5.9%. However, the top 20% of all households in the Lafayette area took home more than 53% of all area income for 2012, while the bottom 20% of households had just a 3% share of area income.
ALSO READ: Cities with the Most Expensive Gas
6. Jackson, Miss.
> Gini Index: 0.5039
> Median income: $42,604
> Poverty rate: 22.2%
> Pct. with income over $200,000: 4.8%
More than 22% of the Jackson area population lived below the poverty line, among the higher rates for metro areas. However, poverty remains especially problematic within the city proper, where 32.5% of the population lived below the poverty line. This was well above the 17.4% poverty rate for the area’s suburbs. Nearly 7% of Jackson households earned less than $10,000 annually, versus 5% nationally. Wealth in Jackson is overwhelmingly concentrated among the wealthiest households in the area. The top 20% of households accounted for nearly 54% of all income, while almost one-quarter of all income in the area went to the top 5%.
5. New York-Northern New Jersey-Long Island, N.Y.-N.J.-Penn.
> Gini Index: 0.5049
> Median income: $63,982
> Poverty rate: 14.8%
> Pct. with income over $200,000: 11.3%
More than 19 million people reside in the New York metro area. The area is also home to many of the nation’s wealthiest individuals, living in and around the city. Last year, over 11% of household incomes exceeded $200,000, nearly double the national rate. However, the lower 60% of households by income accounted for less than a quarter of the area’s annual total, and together earned less than the top 5% of households. Even within New York City, there were large disparities. While the poverty rate in Manhattan was roughly 18% last year, 31% of all residents in the Bronx lived below the poverty line. The Bronx’s median household income was $32,460, while in Manhattan, it was more than $67,000.
ALSO READ: The Best Cities to Flip a House
4. Albany, Ga.
> Gini Index: 0.5311
> Median income: $34,469
> Poverty rate: 26.9%
> Pct. with income over $200,000: 3.6%
More than 12% of households in the Albany area had less than $10,000 in total income in 2012, more than all but one other metro area in the United States. Additionally, nearly 27% of the area’s population lived below the poverty line as of last year, among the worst poverty rates in the nation. Crime also has been problematic as the area’s economy has struggled. Overall, the area’s wealthiest 5% of households accounted for 27% of all income in 2012, more than all but three other metropolitan areas. Earlier in the year, the area received a boost from the increased demand from China for Georgia peanuts.
3. Naples-Marco Island, Fla.
> Gini Index: 0.5343
> Median income: $54,126
> Poverty rate: 13.8%
> Pct. with income over $200,000: 9.6%
Because of its gulfside location, the Naples metropolitan area includes several large and wealthy retirement communities and beach resorts. As of 2012, an estimated 7% of all properties in the area were worth at least $1 million, compared to just 2% of all homes nationwide. The region’s housing market has recovered, which according to The Naples Daily News has resulted in many low-income residents being priced out of the area. As of 2012, the richest 5% of the metro area bring in an estimated 30.8% of the area’s total income, compared to just 22.43% nationally. The bottom 40% of earners account for just 10.6% of income.
2. Bridgeport-Stamford-Norwalk, Conn.
> Gini Index: 0.5459
> Median income: $79,841
> Poverty rate: 8.9%
> Pct. with income over $200,000: 21.8%
The Bridgeport-Stamford-Norwalk metropolitan area, which comprises all of Fairfield County, is home to some of the wealthiest corporations and individuals in the country. An estimated 12.7% of homes in the area are worth at least of $1 million, compared to just 2% of all homes nationwide. More than 20% of all households earn $200,000 or more. The top 5% of earners bring in nearly 30% of the region’s income, and the top 20% of earners bring in roughly 58%. With all the area’s wealth, there are still some pockets of severe poverty. For example, the city of Bridgeport is one of the poorest cities in the nation. More than one in four of its residents lived in poverty last year, including nearly 38% of the population under age 18.
ALSO READ: Ten Brands That Will Disappear in 2014
ALSO READ: America's Richest (and Poorest) Cities
1. Sebastian-Vero Beach, Fla.
> Gini Index: 0.5610
> Median income: $40,413
> Poverty rate: 17.2%
> Pct. with income over $200,000: 7.1%
While 7.1% of households earned more than $200,000 last year, among the higher rates in the nation, no metro area had a greater degree of income inequality than the Sebastian-Vero Beach metro area. In 2012, 33.8% of all household income earned belonged to the wealthiest 5% of households, a higher percentage than any other metro area in the United States. At the same time, the median household income in the area was just over $40,000, versus slightly more than $51,000 nationwide. Further, more than 19% of residents do not have health insurance, well above the national rate of 14.8%.