Income and Employment

Income and Employment

Income Disparities

In recent years, researchers, service providers, and community members have become increasingly interested in income disparities and the ways that income inequality can impact economic mobility for future generations. The DC metropolitan area is considered to have relatively high upward mobility, which can be partially attributed to the region’s high level of racial diversity, lower levels of racial segregation, and a strong middle class.26

However, the District would likely see even more economic mobility if there were not such large income disparities present. One approach to looking at income inequality in the District is the 20/20 ratio, which compares the proportion of income accounted for by the lowest-income 20% with the share accounted for by the highest-income 20%. Using this ratio, DC exhibits an extremely elevated level of income inequality: the bottom fifth earns only 1.9% of total income, while the top fifth takes home 55.5% of the city’s income.27

Globally, income inequality is most commonly measured using a standard economic measure called the Gini index. A score of 0.0 on the Gini index would indicate perfect equality in the income distribution, whereas a score of 1.0 would indicate total inequality. The District continues to show higher income inequality than the nation as a whole. In 2019, the Gini index for the U.S. was 0.481, while the District of Columbia had a score of 0.512, the second highest of all states and territories, behind only Puerto Rico.28 It is important to note, however, that DC is not always comparable to other U.S. states and territories, which tend to have a much larger geographic area and different social, economic, and demographic characteristics from the District. When Washington, DC is considered alongside nine other large cities at the core of major metropolitan areas, the District’s Gini index falls right in the middle.29

Taken together, these two different measures of income inequality help to illustrate that while the District does have a large and growing gap between the highest and lowest income earners, there is also a sizeable middle class in DC, at least when compared to other major cities. The trend of income inequality is projected to continue, although the full impacts of the COVID-19 pandemic on economic inequality in the District remain to be seen.

Employment and Unemployment

One reason for such variance in income inequality is that the number of low-income earners is declining while the number of extremely high-income earners continues to increase. The disparity in income is made worse by employment and job sector trends that increasingly benefit workers in certain sectors,

26 Gregory, G. (2017, March 21). Income inequality and economic mobility in DC DC Policy Center. Retrieved September 8, 2021 from https://www.dcpolicycenter.org/publications/income-inequality-and-economic-mobilityin-d-c/ 27 Ibid. 28 Guzman, G. (2020, September). Household income: 2019, American community survey briefs. U.S. Census Bureau. Retrieved September 7, 2021 from https://www.census.gov/content/dam/Census/library/publications/2020/acs/acsbr20-03.pdf 29 Gregory, G. (2017, March 21). Income inequality and economic mobility in DC DC Policy Center. Retrieved September 8, 2021 from https://www.dcpolicycenter.org/publications/income-inequality-and-economic-mobilityin-d-c/

while leaving others behind. Between March and April of 2020, the District lost 66,900 jobs, 30 and at the height of the COVID-19 pandemic, the District had an unemployment rate of 11.1%.31 Women, people of color, and workers under the age of 24 made up a disproportionate share of the workers who lost their jobs in the early months of the pandemic. These groups are also the employees that have not fully recovered from the pandemic, even though overall employment has been increasing since early 2021.32 Furthermore, as Figure 9 illustrates, while unemployment in the District has been trending downward since peaking in the first few months of the pandemic, daily unemployment claims remained relatively high throughout 2021, and there continues to be periodic spikes in daily unemployment, including one as recently as early September.33 While some workers have begun to recover from the impacts of the pandemic, many remain un- and under-employed. As of July 2021, the District’s overall unemployment rate had fallen to 6.7%, 34 but unemployment remained high in Wards 7 and 8, with unemployment rates of 12% and 15.7%, respectively.35

Figure 9: Daily Unemployment Claims, 3/13/20-9/10/21

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Daily Unemployment Claims Washington, DC March 13, 2020- September 10, 2021

13-Mar-20 26-Mar-20 8-Apr-20 21-Apr-20 4-May-20 17-May-20 30-May-20 12-Jun-20 25-Jun-20 8-Jul-20 21-Jul-20 3-Aug-20 16-Aug-20 29-Aug-20 11-Sep-20 24-Sep-20 7-Oct-20

20-Oct-20 2-Nov-20 15-Nov-20 28-Nov-20 11-Dec-20 24-Dec-20 6-Jan-21 19-Jan-21 1-Feb-21 14-Feb-21 27-Feb-21 12-Mar-21 25-Mar-21 7-Apr-21 20-Apr-21 3-May-21 16-May-21

29-May-21 11-Jun-21 24-Jun-21 7-Jul-21 20-Jul-21 2-Aug-21

15-Aug-21 28-Aug-21 DC DOES, 2021

30 Taylor, Y.S. (2020, May 26). Pandemic-induced unemployment has hit the District’s Hispanic, Latino, and younger workers more intensely. DC Policy Center. Retrieved September 14, 2021 from https://www.dcpolicycenter.org/publications/hispanic-latino-pandemic-unemployment/ 31 Ibid. 32 Ibid. 33 District of Columbia Department of Employment Services. (2021, September). Unemployment compensation claims data. Retrieved September 10, 2021 from https://does.dc.gov/publication/unemploymentcompensation-claims-data 34 District of Columbia Department of Employment Services. (2021, July). Employment status for the civilian population District of Columbia July 2021. Retrieved September 13, 2021 from https://does.dc.gov/sites/default/files/dc/sites/does/page_content/attachments/Jul_2021_EmpStatus_DC.pdf 35 District of Columbia Department of Employment Services. (2021, July). District of Columbia labor force, employment, unemployment, and unemployment rate by ward. Retrieved September 14, 2021 from https://does.dc.gov/sites/default/files/dc/sites/does/page_content/attachments/DC%20Ward%20Data%20Jul21Jun21-Jul20.pdf

The District is home to many flourishing, and sometimes fluctuating, job opportunities and industries, but there is often a mismatch between the skills of the unemployed and the opportunities that some of these industries present. For instance, the top five job openings (based on the average monthly unique job postings) in the District from January 2020-July 2021 were for software developers, management analysts, registered nurses, information security analysts, and computer occupations (all other).36 These in-demand fields typically have very specific education and/or training requirements, making them inaccessible to much of the unemployed population. The three largest classes of workers in the District are those employed by a private company (48.9%), those employed by a local, state, or federal government entity (24.3%), and those employed by a private, not-for-profit company (19.4%). 37

Poverty

Due to pandemic-related economic disruptions, a strong emphasis was placed on the 2020 Supplemental Poverty Measure (SPM), which "extends the official poverty measure38 by taking account of many of the government programs designed to assist low-income families and individuals that are not included in the official poverty measure,”39 such as tax credits and government assistance programs. The SPM also accounts for the cost of living and work and medical expenses. The SPM estimate of persons in poverty in the District for 2018-2020 was 16.5%, compared to an estimated official poverty rate of 14.7% for the same time period. 40

Nationwide, the SPM rate for 2020 was lower than the official poverty rate for the first time in history. The national SPM was 9.1% while the official poverty rate was 11.4%, likely because the stimulus payments that were enacted as part of the pandemic economic relief legislation were included in the calculation of the SPM, but not the official poverty measure. In DC as well as 11 states, SPM rates were higher than the official poverty rates. This could be due to variations in regional housing costs, different mixes of housing tenure, or higher nondiscretionary expenses, such as taxes or medical expenses.41

The official poverty rate—which is different from the SPM—in DC varies significantly from ward to ward. In 2019 (the most recent year for which ward-by-ward Census data is available), Wards 3 and 4 had

In 11 states and DC, the Supplemental Poverty Rate was higher than the official poverty rate in 2020.

36 District of Columbia Department of Employment Services. (2021, July). DC labor market indicators, January 2020July 2021. Retrieved January 13, 2021 from https://does.dc.gov/sites/default/files/dc/sites/does/page_content/attachments/DC%20Labor%20Market%20Indi cators_July2021.pptx.pdf 37 U.S. Census Bureau (2019). American community survey 5-year estimates. Table S2406. 38 The official poverty measure consists of a set of thresholds for families of different sizes and compositions that are compared with before-tax cash income to determine a family's poverty status. 39 Fox, L., & Burns, K. (2021, September 14). The supplemental poverty measure: 2020. U.S. Census Bureau Report Number P60-275. 40 Ibid. 41 Ibid.

poverty rates under 10%, while Wards 7 and 8 had poverty rates above 25%.42 All other wards fell somewhere in between and closer to the District’s overall poverty rate in 2019, 16.2%.43

Poverty for children under age 18 in the District has gradually decreased over the last decade, although it remains much higher than the District’s poverty rate overall. The child poverty rate in DC was 29.6% in 2010 and reached a Figure 10: Child Poverty by Ward and Race/Ethnicity, 2019 new low of

Child Poverty in D.C

24% in 2019.

by Ward and Race/Ethnicity

However, there are 60.0% large disparities 50.0% throughout 40.0% the city based on 30.0% geography and race. As 20.0% Figure 10 illustrates, 10.0% Black children in 0.0% the District Ward 1 Ward 2 Ward 3 Ward 4 Ward 5 Ward 6 Ward 7 Ward 8 DC total experience Ward total % child poverty % Black child poverty child poverty % White child poverty % Hispanic/Latino child poverty DC Kids Count, 2021at much higher rates than their White and Hispanic/Latino peers in nearly every ward. Ward 4 is the exception, where Hispanic/Latino children have a slightly higher poverty rate (14%) than Black children (11%). 44 Geographic disparities are also present, with Wards 1, 7, and 8 having child poverty rates well above the city-wide average, while Ward 3, known to be one of the city’s most affluent wards, has a child poverty rate of only 1.8%.45 There is still much work to be done to address child poverty in the District, as well as the systemic issues that contribute to the wide disparities seen in child poverty across the city.

Employment Barriers and Needs

Many employment barriers and needs exist in Washington, DC that must be addressed for the city to reach its full potential and for all the District’s residents to thrive. Returning citizens are one particular subset of the population that face serious barriers to employment. Although the District of Columbia

42 The Annie E. Casey Foundation, Kids Count Data Center. (2020). Poverty rates by ward in District of Columbia. Retrieved October 20, 2021 from https://datacenter.kidscount.org/ 43Ibid. 44 DC Kids Count. (2021). Ward snapshots. Retrieved October 20, 2021 from https://dckidscount.org/wardsnapshots/ 45 The Annie E. Casey Foundation, Kids Count Data Center. (2020). Poverty rates by ward in District of Columbia. Retrieved October 20, 2021 from https://datacenter.kidscount.org/