A new Brookings Institute study has come out stating that incoming inequality continues to be a major issue especially in the 50 largest US cities. Across the 50 largest cities it was found that households in the 95th percentile earned 11.6 times what households in the 20th percentile earned. This is in comparison to the national average of a 9.3 gap.
At the center of this debate is minimum wage. While some cities have gone ahead and raised minimum wage, Seattle plans to have theirs to $15/hour by 2017, other cities have not made such a bold jump. With Seattle’s pledge I wonder what their job market will look like in the next few years? I assume there may be an excess of demand for minimum wages jobs. Interestingly enough, despite the rise in the minimum wage in Seattle they are the number one city with significant increases in the 95th percentile incomes. Seattle increased by 14.9% between 2012 and 2013 which accounts to about a $36,000 increase. It makes sense that a growing economy in the higher income sector, should be able to grow in all areas. With Seattle the technology hub that it is, the multiplier is usually around 5; for every one job created in the innovation sectors means about 5 additional jobs in the service industry. However, we still do not see evidence that rising incomes at the top will trickle down to the bottom. It will however, be interesting to see how and/or if the gap starts to close between the top earners and bottom earners in Seattle.