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Income Inequality Affects More than Half of Washington’s Workforce, Study Finds

Most of the region is barely recovered from the recession, according to a new report from three local think tanks.
Photograph via Shutterstock.

While much of Washington continues to perceive a general wave of economic growth, one does not need to go far to find reminders that not everyone is sharing in the prosperity. A study released in March found that the District has the country’s fourth highest rate of income inequality when the top five percent of earners are compared to the bottom 20 percent.

But a new study, released Monday, shows the disparity runs much deeper throughout the region, with data showing stagnating wages for workers in the middle of the pack and fewer opportunities for people without at least a bachelor’s degree.

“Bursting the Bubble,” prepared by the DC Fiscal Policy Institute, the Maryland Center on Economic Policy, and the Commonwealth Institute in Virginia, finds that Washington-area workers with just a high-school education saw their incomes drop 9 percent between 2007 and 2012. The drop was even greater for people who did not complete high school.

People with some college education also fared poorly, seeing their wages decrease by 10 percent since the start of the recession. Altogether, more than half the region’s workers are lagging behind. 

“Less-educated workers have been walloped,” says Michael Cassidy, the president of the Commonwealth Institute. “A very significant chunk of the workforce has been left behind.”

Cassidy says the lingering effects of the recession extend beyond measuring workers’ educations. While the highest-income earners have seen their hourly wage increase by $4.11 since 2007, Washington’s median wage of about $22 an hour has only gone up 16 cents. “It’s a rounding error, basically,” Cassidy says.

Stark increases in housing costs only add to the hurt. Most jurisdictions show about 30 percent of homeowners with mortgages are paying at least 30 percent of their incomes on housing. Renters have it worse, with at least half the renters in the District and many surrounding counties paying at least 30 percent.

Charts courtesy the Commonwealth Institute.

The report also explains that while the District has fared best since the recession, the suburbs have not. Median household income in DC went up by more than 10 percent between 2007 and 2012, but declined in nearly every other local jurisdiction, with Calvert County’s median household income dropping nearly 20 percent, and Fauquier County falling about 12 percent. Inner-Beltway suburbs did not go unscathed either: Alexandria’s median household income fell about 10 percent over the five-year period.

Cassidy says the effects go back to the recession’s root cause: the housing market’s collapse. The local construction industry is down about 40,000 jobs since 2007, and while overall private-sector employment has finally crawled back to pre-recession levels, many people are returning to the workforce with lower-paying jobs. Manufacturing and transportation also lost tens of thousands of workers.

“Those are well-paying, middle-class jobs,” says Cassidy. The non-government industries with the highest job-growth rate are low-paying ones like hospitality and home health care.

There is no catch-all remedy to bring up working-class residents of the District, Maryland, and Virginia, Cassidy says. The researchers behind the study write that they are encouraged by recent efforts by DC and Montgomery and Prince George’s counties to raise the minimum wage. (The District’s goes up to $9.50 an hour on July 1.) But researchers are still concerned by rising health-care costs, an effect made worse in Virginia by the General Assembly’s refusal to expand the state’s Medicaid program to cover more residents.

The biggest finding, though, is that it is much more than the bottom rung of people who are still reeling from the recession.

“It’s surprising to find such a large segment of the labor force in the national capital region is struggling,” says Cassidy. “We’re not just talking about a sliver.”

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Staff Writer

Benjamin Freed joined Washingtonian in August 2013 and covers politics, business, and media. He was previously the editor of DCist and has also written for Washington City Paper, the New York Times, the New Republic, Slate, and BuzzFeed. He lives in Adams Morgan.