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Income inequality is surging, and there are few countries where it is rising faster than the United States. The distance between rich and poor is greater in America than nearly all other developed countries, making the US a leader in a trend that economists warn has dire consequences. GlobalPost sets out on a reporting journey to get at the ‘ground truth’ of inequality through the lenses of education, race, immigration, health care, government, labor and natural resources. The hope is to hold a mirror up to the US to see how it compares to countries around the world.
An unmistakable disparity in life expectancy and access to quality health care have become hallmarks of the Washington, DC area.
And when it comes to rich and poor in D.C., the difference is black and white. Washington’s racial divide by-and-large corresponds to its class divide, which is wide. At 27 percent, the poverty rate for blacks in D.C. is more than three times that of whites, mirroring national data on the discrepancy between the percentage of poor blacks versus poor whites.
Bernard Thomas, 47, has his blood work done at the Bread For The City clinic in Washington, DC. All visits are completely free for those needing medical treatment.
The decisive marker of this divide is life expectancy. Blacks in Washington have a life expectancy of 71 years. Whites, mostly educated professionals, have a life expectancy of 83 years. The district’s blacks live shorter lives than blacks in any state while its whites live longer lives than whites in any state.
Washington’s Gini coefficient — a single measure that provides a snapshot of income inequality — is nearly the same as Russia’s, where over the last two decades an ideology obsessed with eliminating class has given way to the realities of crony capitalism in which the wealthy and the politically connected are provided for and the poor seem as vulnerable in Moscow as they do in Washington. In Russia, economists and political observers say a mutated health care system that survived the now-collapsed Soviet system reflects a growing inequality that is pulling apart a nation for whom the Communist slogans of equality ring as hollow as the capitalist assurances that a free market system will be the best way to provide for all.
Unlike Herbert, Jim Abdo does have a home — and he’s built many more. A housing developer, he’s seen his own fortunes, and a real estate empire, rise with those of D.C.’s affluent class. His personal residence is in Washington’s wealthy Northwest quadrant.
Since its 1996 founding, his company has developed over 30 luxury condo and apartment properties and, Abdo estimates, seen “well over 1000 percent growth.”
His developments — “Ultimate Urban Condos” and “Deluxe Apartment Rentals” — cater to the professionals who, thanks in large part to high-end projects like Abdo’s, have been flocking back to D.C.’s urban core. Abdo’s known for restoring historic buildings, often in once-dilapidated neighborhoods, though demand is so strong that he also creates large new developments from the ground up.
Abdo says the renters and buyers his properties are designed for — “CFOs, COOs, partners in law firms”— value his attention to detail. “We create very dramatic living spaces,” he says.
Americans love few things more than blaming their problems on Washington, and in the case of inequality they’d be half-right.
The benefits of the last 30-odd years of technological advance have accrued almost entirely to the wealthy. Advances in computation, automation, and communications have allowed America’s skilled workers to create ever-more valuable output. At the same time, they’ve nearly eliminated a solidly middle-class category of clerical jobs. This is not the fault of the federal government.
But another important factor in the divide is the neoliberal philosophy that has held great sway in the capital since the 1980s.
Republican Congressman Rep. Michael Burgess of Texas, the Vice Chair of Energy and Commerce committee (red tie) during the House of Representatives committee on Health Law Exchanges/Medicaid Expansion Implementation hearing in Washington, DC, on President Obama's healthcare plan.
Beginning with Ronald Reagan and running through to Barack Obama, successive administrations have consistently liberalized trade, creating economic growth but also making it easier to outsource manufacturing and other middle-class jobs.
Both parties also embraced financial deregulation, spurring growth in a sector where salaries are clustered at the top and fostering the conditions for a financial crash and recession that have hit the bottom and middle the hardest.
Over the same period, the federal tax code became easier on the rich, a trend reversed in part by Congress just this month by a last-minute fiscal cliff deal.
The net result: Between 1979 and 2007, the average income of the top 1 percent of households increased by 245 percent, while rising just 11 percent for the bottom fifth of households and 19 percent for the middle fifth, according to the non-partisan Economic Policy Institute.
A Tale of Two Cities
In D.C., the wealthy not only benefit from national trends they’ve helped create, they benefit locally as well.
Abdo credits D.C.’s thriving housing market, and the vibrancy it’s brought to much of the city, to improved municipal leadership and to people like himself “who took a chance on the District.”
But he also has government privatization to thank. Over the past 20 years, it has fueled the creation of wealth in D.C. in a big way. The amount of federal procurement spending going to private firms in the area has quadrupled since 1990 and reached $80 billion in 2011, Reuters reported last month.
Because of this outflow of public largesse to private companies, Washington has the highest concentration of America’s fastest-growing companies of any major metropolitan area in the U.S., according to a recent study by the Kauffman Foundation, which notes that half of those companies are in government services.
Unemployment in the Washington area is 5.3 percent, well below the national average of 7.9 percent, according to Department of Labor statistics.