A look at income inequality in the Charlotte Region
By Katie Zager
You may have heard expressions like, “they’re in a different tax bracket” or “we are the 99%.” These phrases, which pop up on social media, and in the occasional news headline, refer to the presence of income inequality in the United States. That is, they are concerned with the percentage of money people take home and the percentage of total dollars they earn in a given year.
Income inequality has long been measured on the national scale. It’s also been compared over time to help people understand whether the economic activity in a given place benefits all residents, or just a select few. Recent studies however, have gotten a bit more granular. They zoom in on income inequality at the neighborhood scale.
In the United States, high levels of inequality:
- have been associated with poorer health outcomes,
- are correlated with individual financial wellbeing,
- impacts levels of social cohesion,
- and influences a person’s perceptions about equality in America.
Studies on economic mobility, which have been particularly relevant to Charlotte in the last decade, found that social interactions among people of varying classes and incomes are a key ingredient to lifting children out of poverty.
In this article, we look at neighborhood-level (census tract) income inequality in the Charlotte region, using the Gini Coefficient published in the 2022 American Community Survey. The Gini Coefficient, sometimes known as the Gini Index, measures income inequality by comparing a perfectly equal distribution of income to the actual distribution in that neighborhood. For example, a Gini Index score of 0 would have 10% of households making 10% of the income, 20% making 20%, etc. A Gini Score of 1 means that 1 household gets 100% of the income. Therefore, a lower Gini Index score means there is less income inequality in that neighborhood.
Both equal and unequal neighborhoods can be found throughout the Charlotte region.
Throughout our region, neighborhoods range from having Gini Coefficients as low as .22 (confidence interval .11-.31), to as high as .66 (confidence interval .45-.87). The median level of neighborhood inequality was .4075, which is on par with the U.S. national value. Gini coefficients in the .5 to .6 range are generally considered some of the highest in the world, although the implications of inequality on a neighborhood and national scale are quite different.
In the Charlotte region, the highest levels of inequality can be found in some south Charlotte neighborhoods, in the eastern part of Gaston County, and in the towns of Boiling Springs, Maiden, and Salisbury. Upon closer inspection, many of these neighborhoods have amenities such as lakes/rivers, colleges, and golf courses that might attract high-income residents.
Map 1: The Gini Index of Income Inequality by Census Tract
Data Source: 2022 American Community Survey, 5-Year Estimates
But incomes matter, too.
The main limitation of the Gini Index is that it compares the distribution of a neighborhood’s income to that neighborhood’s average, but does not give any indication of whether or not that average is high or low. A neighborhood can be unequal because it looks like a modest village with a castle on the hill, or a bunch of high-end skyscrapers, with an affordable housing development tucked away inside. The Gini Index treats them as the same.
One way to solve this issue is to incorporate median household income into the interpretation of the data.
The map below, a bi-variate map, is shaded to show both the level of income inequality (Gini Index), and the median household income. This will give you an idea of whether the majority of households are on the higher or lower end of the income spectrum.
Looking at the color of an area on the map, higher income areas are tinted pink (the higher the income, the pinker the color). The bluer the tint, the higher the inequality. Keep reading below to get more detail about the types of neighborhoods you might see on the map.
Map 2: Income Inequality and Median Household Income by Census Tract
Data Source: 2022 American Community Survey, 5-Year Estimates
Lower Income, High Inequality (medium blue) These areas have low median incomes, but a sizable enough portion of people with very high incomes. So much so that the average distance from the median is quite high. One example of this is in Boiling Springs, where the median income is $61,539, but 7% of the population makes over $200,000 a year. Almost 4 times the median income!
In these areas, most households are low-to-moderate income, with a few select households earning a large slice of income.
High Income, High Inequality (dark purple) These areas have high median income, but a sizable enough portion with low incomes, that again, the average distance from the median is quite high. One example of this is the Foxcroft neighborhood. You’ll find this just southeast of center city Charlotte. There, the median income is $186,128, but 18% of households make less than $50,000.
In these areas, most households have very high incomes, but about 10-20% of households have lower incomes. Here, a lower-income household might be surrounded by many high-income households, without much in between.
High Income, Low Inequality (deep pink) These areas have a high median income, but relatively few households with low incomes. Many households in these areas have incomes close to the median. An example of this can be found in a neighborhood just north of Waxhaw, where the median income is $222,759, and almost 75% of households make over $100,000 a year.
In these areas, most households are very high-income, and less than 10% of households are lower-income. These are areas of concentrated wealth.
Lower Income, Low Inequality (light purple) These areas have relatively low median income, and relatively few households with very high incomes. A large number of households in these areas have incomes close to the median. One example of this is a neighborhood north of center city Charlotte, where the median income is $50,625. Here, just 3% of households have incomes over $200,000.
In these areas, there is a concentration of lower-income households. Lower levels of inequality mean that an individual has a good chance of meeting someone with a slightly higher income, but that income is still likely to be below average for the region.
Moderate Income, Moderate Inequality (purple) These areas in the middle of the scale have both median incomes and levels of inequality that are closer to average for the region. Overall, incomes are more evenly distributed across the spectrum. For example, a census tract in eastern Cabarrus County has a median household income of $75, 809, but about 30% of households have incomes below $50,000 and 20% have incomes between $100,000 and $200,000.
These areas are likely to have a more diverse housing stock that is able to attract families and individuals from across the income distribution. And while very high income households are present, they hold a more proportionate share of the resources in the area.
You can use the drop-down menu on the chart below to see the income distribution for the example neighborhoods.
Figure 1:
What does this mean for the people living in these types of neighborhoods?
Neighborhoods with varying levels of income and inequality can be found throughout the Charlotte region. While there are some broad patterns in where higher-income households live, levels of inequality in more rural and lower-income areas can sometimes rival those found in higher-income neighborhoods. Indeed, there are a number of county level and local policies that can impact the levels of inequality we see, including what kind of housing gets built where, what kind of natural and man-made amenities an area has, as well as the overall nature of the city, town, or county economy.
Still, outside of the policy realm, the distribution of income and wealth in a given neighborhood can have significant impacts on the quality of life for the people who live there. Here are a few questions to get you thinking about how income inequality impacts you and your neighbors:
1.What does it mean in terms of who has influence or who holds power?
2.What does it mean to have a few high income individuals as neighbors, but a low probability that you will actually encounter them?
3. Where is inequality most visible? Where is it invisible? Are there places where low-income households are largely out-of-sight, out of mind?
References:
- 1Linda Zhao, Philipp Hessel, Juli Simon Thomas, Jason Beckfield; Inequality in Place: Effects of Exposure to Neighborhood-Level Economic Inequality on Mortality. Demography 1 December 2021; 58 (6): 2041–2063. doi: https://doi.org/10.1215/00703370-9463660
- 2Neman, T.S. Does Your Neighborhood’s Income Distribution Matter? A Multi-scale Study of Financial Well-Being in the U.S.. Soc Indic Res 152, 951–970 (2020). https://doi.org/10.1007/s11205-020-02458-w
- 3Minkoff, S. L., & Lyons, J. (2019). Living With Inequality: Neighborhood Income Diversity and Perceptions of the Income Gap. American Politics Research, 47(2), 329-361. https://doi.org/10.1177/1532673X17733799
- 4https://opportunityinsights.org/wp-content/uploads/2022/07/socialcapital_nontech.pdf