Washington has third-widest income gap in US: Analysis

America’s capital city is a microcosm of the increasing income inequality facing the larger US economy, featuring the wealthiest high-income households among big US cities, a new report says.

Proof of Washington’s growing gap between rich and poor is visible right outside the White House, with upscale restaurants and apartments replacing once-blighted neighborhoods, Reuters reports.

The middle-class jobs in the District of Columbia that hollowed out in the 2007-2009 recession have failed to come back and a flood of mostly young, educated newcomers has wiped out low-cost housing within sight of the Capitol, the report said.

Washington had the third-widest gap between rich and poor among the 50 biggest US cities, following Boston and Atlanta, according to a 2012 Fiscal Policy Institute analysis.

The top 5 percent of households in the District had average incomes of $473,000, highest among the biggest 50 US cities, while the poorest fifth averaged less than $10,000, the analysis said.

“We’re a city that has very healthy upper-income residents, and then a very healthy lower-income population, and not a good in-between,” said Phil Mendelson, chairman of the city council.

Ed Lazere, executive director of the think tank DC Fiscal Policy Institute, said the bottom of the city’s workforce is earning stagnant or falling wages while wages for Washington’s highly educated top earners are rising, adding such a pattern is rampant throughout the country.

The DC’s 18.2 percent poverty rate is more than 2 percentage points higher than America’s average, 2012 Census Bureau figures show.

In December, President Barack Obama called the growing US income disparity “the defining challenge of our time,” saying it restricts economic mobility and threatens to shrink the middle class.

The non-partisan Congressional Budget Office also said in December that the top fifth of American families saw a 7 percent increase in their share of income in 2010 to over 50 percent from 43 percent in 1979.

Most of the income gain between 1979 and 2010 went to the top 1 percent, whose share increased from 9 percent to 15 percent, the CBO said. The share of income for households in the bottom 40 percent dropped over the same period.