Bay Area Wage Gap Is Widest in the US

Bay Area Wage Gap Is Widest in the US

Yes, you read that title correctly. California’s Bay Area holds the widest wage gap in the nation. For many, however, metrics like this in America’s economy can be daunting to understand if not downright confusing. So, what does this newly established title mean for the Bay Area? Here’s what you need to know. 

What is a Wage Gap?

Unlike other aspects of the economy, this one happens to be fairly simple. The wage gap of any given area or combination of areas refers to dollar signs. Specifically, how many dollars top earners are making compared to those on the bottom rung of the economic ladder. 

Generally, the lowest earners in any given area make the federally mandated minimum wage of $7.25 per hour. That comes out to $15,000 per year without overtime or taxes factored in. For the Bay Area, the lowest earners make an average of $25,039 per year. Though the minimum wage was recently raised to $15 an hour.

Top earners in the same location, on the other hand, make an average of $808,105 annually. That comes out to roughly $404.05 per hour provided those individuals work 40 hour weeks. The difference between the two is $783,066.

Understanding the Data

This information comes from new research published by the Public Policy Institute of California from a study analyzing the 2018 U.S. Census Bureau Data, which is the most recent source of data on the subject. 

While the District of Columbia, Missouri, New Mexico, New York, and Louisana still experience higher income inequality than California as a whole, the Bay Area takes first place in any single location across the country. 

Fully understanding this data requires a look at past information on the wage gap to identify how low, middle, and upper income earners have all grown financially over time. From 2006 to this recent 2018 data, only one of those three has seen a ture increase in yearly income. 

The Disparity

The top 5% of households, those making the most each year, saw their income grow by 18.6% in that time period. The bottom 20% of households experienced a 20% decline. Since 1960, top earners have seen a 60% increase while the bottom 10th percentile has only seen a 20% increase. 

In 80 years, top income earners enjoyed steady wage growth while the lowest brackets saw slight increases and even deterioration in thier wages. While the reasons behind that are worthy of a post-graduate economics course, those with such degrees in hand find the information highly concerning. 

The Impact

From violations of wage laws that require the aid of an employee attorney San Francisco to the growing wage gap trend and even tax evasion, there are seemingly countless reasons why all economic classes have not experienced similar growth. Various experts on the matter have different opinions on top causes, as well. 

One thing economists agree on, however, is that the lack of growth in any bracket below those at the top is disheartening to the average worker. This disparity takes away part of the incentive and possibility to even climb up into higher-earning brackets. 

Climbing company ladders and earning raises still takes place, but the extra cash needed to make smart investments and climb the economic ladder is something all too many Americans simply cannot afford as wage gaps across the nation increase. 

For the Bay Area, unfortunately, it’s now a near impossibility. For now, hopes of better economic policy from the top levels of the nation down are more easily held onto than a steady wage.

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