Rich Man, Poor Man: Connecticut Tops U.S. Wealth Gap
Growing up in poverty on the streets of Bridgeport, Connecticut, Carlos Gonzalez sold heroin and crack cocaine and eventually landed in jail. Now he cleans the kitchens of Greenwich private schools and of financial companies UBS AG (UBSN) and Royal Bank of Scotland in Stamford.
“It’s hard to see the wealth -- it feels so out of reach,” said Gonzalez, 42, who lives less than a mile from the now-demolished public housing project where his grandmother raised him in Connecticut’s largest and fourth-poorest city. “I will never have that. So I just pray to God every day to give me the strength to go to work and do the right thing.”
Nowhere is the contrast between rich and poor clearer than in the metropolitan region abutting New York, stretching from Greenwich on the west to Bridgeport on the east. This 625- square-mile swath, where subsidized housing complexes sit blocks from multimillion-dollar mansions, is home to the widest income gap of any metro area in the U.S., according to Census Bureau data compiled by Bloomberg. If this region were a country, it would be the 14th-most unequal spot on the planet, ranking just below Brazil, based on figures in the CIA World Factbook.
Economic inequality sparked the Occupy Wall Street movement and is shaping the 2012 presidential campaign. Calling it “the defining issue of our time,” President Barack Obama told an audience in Kansas last week that income disparity can drag down the economy. Obama, whose re-election chances are challenged by weak job growth, said millions of Americans feel “the basic bargain that made this country great has eroded.”
‘Microcosm’ of U.S.
Stagnating wages of working Americans and lower tax rates for top earners have contributed to broadening the gap between rich and poor, said A. Fiona Pearson, who teaches sociology at Central Connecticut State University in New Britain. So, too, has the economy’s shift from manufacturing to services and the growing importance of educational attainment, she said.
Connecticut’s per capita income is the highest of any state in the nation at $36,775, according to the census. In the Bridgeport-Stamford-Norwalk metro area, 53,076 households took home at least $200,000 -- and 16,505 earned less than $10,000.
“This region is a microcosm of the U.S.,” Pearson said.
Exacerbating the gap are the ranks of wealthy residents who have grown richer as the region became a hub for investment firms and hedge funds, she said. Median household income hovers 60 percent above the national figure at about $80,000.
Income disparity in the U.S. has expanded among working-age people since 1980, in total by 25 percent, according to a report this month from the Paris-based Organization for Economic Cooperation and Development. The average income of the top 10 percent in 2008 was $114,000, almost 15 times higher than that of the bottom 10 percent’s $7,800. That’s up from 10 to 1 in the mid-1980s.
Lin Lavery, 63, moved to Greenwich 28 years ago. She lives with her husband, who works in finance, on a tree-lined street with private trash pickup about a 10-minute drive from the Greenwich Country Day School, where kindergarten tuition costs $29,700 plus a $3,500 enrollment fee.
While it’s possible to ignore the wealth imbalance growing around her, Lavery said she worries about its social costs.
“When you live in a town where there’s so much affluence, it’s sometimes easy for people to lose sight of that, and to raise children who never understand that,” she said as she sat in her electric-blue Mini Cooper parked at the Greenwich Public Library. “They value money and things over hard work and helping others.”
Lavery is spearheading a revamp of a run-down public pool, which she hopes will also attract wealthy residents who now huddle at local country clubs.
Greenwich, home to at least 50 of the state’s more than 150 hedge funds and with a median annual household income of $125,000, has earned a reputation as a place of stone-gated neighborhood associations with custom-landscaped vegetable gardens. Residents paid more income taxes to the state in 2009 than any other municipality, even though the town is only the 10th-largest in Connecticut.
One doesn’t need to leave the town to see disparity. About 2,150 of its 60,000 residents live in poverty, defined as less than $22,113 for a family of four, according to the 2010 American Community Survey. More than 10 percent of public school students are eligible for free or reduced-price lunch, the United Way’s Greenwich chapter says, and there are 1,195 units of subsidized housing.
Economists measure income disparity using the so-called Gini coefficient, named after an Italian statistician who developed the formula in 1912. A measure of 0 means all money is evenly distributed; 1 means one person has it all. The Bridgeport metro area’s Gini was .537 in 2010, the highest in the U.S. and up from .459 in 2000, census data show. The nation’s grew during this time as well, to .469 from .46.
Income inequality isn’t just an issue for people living in communities most affected by it; persistent differences can stunt economic growth and make countries more susceptible to financial crises, said Nora Lustig, an economics professor at Tulane University in New Orleans. It may also lead to social and political instability and a workforce lacking skills, she said.
Other experts such as Howard Rosen, a fellow at the Peterson Institute for International Economics in Washington, have a different view. He said it’s hard to make the argument that income inequality has hindered U.S. economic growth in the last three decades.
The OECD report, for instance, showed that all income levels have grown in the U.S., whereas nations such as Israel and Japan have seen earnings fall for the bottom 10 percent from the mid-1980s.
In the U.S., “A rising tide raises all boats,” although it may not raise them all by the same amount, Rosen said.
Still, he said, while income inequality may not have economic consequences, it can have a social impact.
The tide isn’t apparent in much of Bridgeport. Dollar Dreams hawks hair brushes and toilet paper next to a Rent-A- Center Inc. store, the largest rent-to-own company in an industry whose payment plans for people with bad credit can inflate prices of laptop computers and washing machines by more than 300 percent, according to a Consumer Reports study.
A 35-minute drive down Interstate 95, Mercedes-Benz of Greenwich is doubling the size of its showroom. “Our intention is to make it a first-class, luxury-type experience,” said Tony Pordon, an executive vice president at Penske Automotive Group Inc. (PAG), which owns the facility. The Mercedes C-Class, with some sedans starting at $58,930, is one of the best-sellers, he said.
‘Keeping Up With J. Lo’
The psychological impact of poverty weighs uniquely on the poor living in areas with such large income gaps, said Carla Miklos, who quit investment banking to run Operation Hope, a food pantry and homeless shelter in Fairfield.
“Everywhere you turn you’re seeing extreme wealth -- BMWs and Mercedes and Porsches,” she said. “It’s not a lot of keeping up with the Joneses anymore. It’s like keeping up with J. Lo.”
The U.S. recession shifted the job market in a way that puts the poor at an even greater disadvantage, said Scott Wilderman, president of Career Resources, a nonprofit group that finds work for the unemployed. The market for entry-level jobs at places like Wal-Mart and Home Depot -- which Wilderman had matched with the formerly incarcerated or people on welfare --is now crowded by the formerly middle class with college degrees.
At 61, Sandra Vining is looking for a second job. Wilderman hired her to assist people applying for food stamps and other aid. She’d sign up herself, except she earns $400 above the monthly threshold. She relies on her daughter, Dawn, to pay part of her rent and phone bills. She hasn’t bought a new pair of shoes in two years and sometimes chooses between gas and groceries.
“All I want to do is be normal, and open my icebox and see it not empty,” she said.
Once the spine of an industrial powerhouse, Bridgeport’s Barnum Avenue now features block after block of factories with overgrown foliage poking through broken windows. Liquor stores far outnumber fresh-produce groceries in the surrounding neighborhoods, including the nearby street where Gonzalez, the cleaner, lives.
In an age when governors around the country are plugging state budget deficits by paring spending on education and social services, Connecticut’s Dannel Malloy has sought to shield residents most reliant on the safety net.
His budget, which lawmakers passed in May, increased personal-income and sales taxes by the most in state history and included a “luxury tax” on expensive clothing and boats. It also provides an earned-income tax credit that puts millions of dollars each year into the pockets of the working poor.
“People who were once solidly middle class are now solidly hurting,” Malloy, a Democrat who took office this year, said in a telephone interview.
Reverend Kibbie Laird is doing what she can to ease the pain.
On a recent afternoon at the First Presbyterian Church of New Canaan, Laird talked to the congregation’s youngest members about inequality in their own backyard. While discussing donations for a poor family living in a nearby shelter, she recalled, they broke into laughter when she mentioned their most urgent need: undershirts and socks.
“I asked them, ‘What would you do if all you had were the clothes on your back?’” she said. “You wouldn’t want another pair of Uggs, you’d want another pair of underwear. They need to understand how important this is.”