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Inequality Highest in U.S. Cities With Strong Economies: NY Fed

William Edwards

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Wage inequality tends to be the most pronounced in U.S. urban areas with strong economies, while pay in regions with weaker economies -- such as the Rust Belt -- is more even.

Cities like San Francisco and New York, which have a concentration of skilled workers in high-wage industries like tech and finance, experience higher levels of inequality than cities such as Detroit or Indianapolis, researchers at the Federal Reserve Bank of New York said in a blog posted Monday on the bank’s website.

The main forces behind these regional disparities are globalization and automation, which have played a larger role in areas such as the Midwest that are home to many manufacturers, the study found. Stagnant wages and less demand for high-skilled workers has “compressed wage distributions” in these areas more than in those places with stronger economic growth, the New York Fed’s Jaison Abel and Richard Deitz said. Domestic migration of skilled workers to big cities has also been a factor.

Other cities with elevated wage inequality include Houston, Los Angeles, Washington and Chicago. Metro areas in which pay was more equitable included Minneapolis, Kansas City and El Paso.

To contact the reporter on this story: William Edwards in Washington at wedwards29@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle, Ben Holland

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