By Dr. Kelley Cullen
While many urban communities are seeing challenges associated with growing income inequality, income distribution in the greater Tri Cities has remained steady over the past decade. Benton-Franklin Trends 3.1.4 presents data from the US Census Bureau’s American Community Survey (ACS) for the Kennewick-Pasco MSA (showing the combined counties) as well as for the counties separately. Washington and US data are also provided as benchmarks. Income earners are sorted into quintiles, five groups each with 20% of the workers, sorted from lowest to highest earnings. The share of total income that each quintile represents is then calculated and compared.
What does income distribution look like for the greater Tri Cities?
The adverse effects of income inequality on communities are especially problematic when income inequality is worsening (increasing). While there are certainly differences in the shares of income by different quintiles of earners, the good news is that the shares themselves have changed little in the past decade in the combined counties.
For example, while the top quintile (20%) of income earners has nearly as much total income as the other four quintiles combined at nearly 49% of total income, this has only increased by three percentage points since 2010. In contrast, the lowest quintile of income earners represents only 3.5% of total income for the combined counties, also seeing very little change since 2010. Thanks to the margins of error provided by the ACS, calculations confirm that the change is not statistically significant.
Additionally, compared to the state and nation, income distribution in the greater Tri Cities is more equal. A simple way to measure income inequality is to compare the share of total income earned by the highest (having most total income) quintile to the lowest (with the least total income), in the form of a ratio. The lower the ratio, the more equal income distribution is.
In 2023, the ratio for the two counties was 48.6% to 3.5%, or 13.9. The ratio for Washington was 50.7% to 3.1%, or 16.4. The ratio for the U.S. was 51.6% to 3%, or 17.2.
Turning to the counties separately, the ratio in Benton County was 49.4% to 3.35%, or 15. While this is slightly higher than the MSA overall average, it is still below the state and national averages. Since 2010, the ratio in Benton County has increased from 47.5% to 3.5%, 13.6 to its current level of 15.
The income distribution in Franklin County is even more equal with a ratio of 47.1% to 3.8%, or 12.3. Back in 2010, the ratio of the highest to lowest quintiles of earners was quite similar at 45.5% to 3.8%, or 12.0.
So how does this compare to other nearby cities / counties in the state?
Unlike the Tri Cities, most other urban centers on the east side of the state have experienced significant increases in income inequality over the past decade. Whereas Spokane had the same ratio as the Tri Cities back in 2010, since then the ratio of the share of total income by the top earning quintile compared to the lowest earning quintile has risen to 15.2 (50.1% to 3.3%).
Likewise, both the Wenatchee – East Wenatchee MSA and Grant County have seen big jumps from ratios around 11 back in 2010 to a ratio of nearly 15 in 2023.
Why might changes in income distribution be harmful?
Research on income distributions has shown that widening gaps between the shares of total income of the highest and lowest earners could impact economic growth through lower levels on consumption by those in lower income groups.
Socially, increases in income inequality could lead to decreased social cohesion as large income disparities can isolate groups to different parts of the community and even foster resentment.
And the effects on health are another vital aspect to consider. Income inequality often correlates with disparities in health outcomes, where higher-income individuals have access to better healthcare services, nutrition, and living conditions. This divide leads to a cycle where poverty and poor health reinforce each other, perpetuating income inequality.
Fortunately, it seems the Tri Cities has been able to stave off some of these ill effects by maintaining a consistent income distribution over the past decade and is doing better than other parts of the state and the nation. However, it is important to stay vigilant and continue to monitor the data for changes.