Washington DC: Filthy Rich or A City Divided?

The annual list of the richest counties in the United States was put out by Forbes the other day and 6 out of 10 of them are within spitting distance of the Beltway. However, doesn’t that go against everything we know about the New York-then-San Francisco-then-Washington rankings for expensive places to live and income to justify it? Maybe not… I’ll explain.

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For context, the 2014 winners for Forbes’ America’s Richest Counties 2014 are the following, along with the county’s median household income: (I crossed out the four that weren’t in DC because, well frankly, who cares about them anyway).

  1. Falls Church City, VA $121,250
  2. Loudon County, VA $118,934
  3. Los Alamos County, NM $112,115
  4. Howard County, MD $108,234
  5. Fairfax County, VA $106,690
  6. Hunterdon County, NJ $103,301  
  7. Arlington County, VA $99,255
  8. Douglas County, CO $97,252
  9. Stafford County, VA $95,927
  10. Somerset County, NJ $95,574

Arlington, Fairfax, and even Stafford have big government or government-sponsored employers, including the Department of Defense (Pentagon), and plenty of other big hirers. DC, itself, is of course filling these “towns”, “villages,” “springs,” and “glens” of the suburban landscape with its commuters. After all the capital houses a chunk of federal employees (though less than you may think at under 20%), huge defense contractors, lobbyists, a goodly portion of the nation’s think tanks, and more trial lawyers than any other American city.

That also explains why the Beltway and Union Station are absolutely swamped at rush hour—it means a lot of people come from really far away. This, in turn, helps explain why flexi-place and teleworking have basically become the norm in this big company town. But it doesn’t—in and of itself—explain how so many of the top richest counties are around the District.

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Frankly, I was perplexed by the trend.

For starters, everything I see about the most expensive places, the wealthiest markets, or the priciest real estate seems to bring up the same places. And DC, while certainly on/around that list, ain’t the worst by a long shot. California coastal cities and New York (sometimes multiple boroughs) are usually the front runners on all these lists.

So what’s the discrepancy? How is it that all these counties are supposedly the richest, while New York and San Francisco offer the most expensive real estate?

While there are plenty of extremely wealthy markets or neighborhoods in New York and San Francisco, not everyone there is part of these high-income brackets. But DC is the same—it’s got a mix, right? So then why are NYC and San Fran’s hinterlands—which by virtue of both cities being more expensive, should be even more densely populated with richer families to justify the higher cost of living—host fewer of the nation’s richest suburbs?

So to clear it up, I started looking at the metropolitan areas of each of these cities for answers. According to the US Census Bureau (admittedly and questionably deciphered by Wikipedia), the rankings by household income go (1) the Bay Area at $63,024, (2) NYC Metro (including New Jersey and Connecticut) at $59,799 and then (3) Washington DC at $57,291 (including Maryland and Virginia)—pretty much as expected.

I was first off put by this because I thought, “oh, no, the government is paying its workers so much that the whole region has become the richest in the country!!” But if we’re not as rich in total as the other two major money-bag cities, then it’s not all that bad. Then, I realized the more off putting reality. The Washington DC-area counties were particularly prone to economic homogeneity—more so than San Francisco and the NYC area.

There’s no way that could be the case,” I thought. “Not with such a diverse mix of folks in DC, itself!” How naïve I was. Sure, Washington DC is a hub of different people—but that’s because it’s just that, a hub. It’s filled with a transient mixture of folks who scurry back to their little corner of the city after they’re released for the day. There is a clear bright line drawn right down the middle of the city that divides the richer from the poorer—and while that line is moving Eastward, it’s still there. The suburban counties, I realized, must be no different.

I admit that I’d have to do an economic study to be certain—but at first blush, it looks like DC suburbs are more “classist” (not to be confused with classy) than are the counterpart suburbs of the Bay Area and NYC. The DC-VA-MD area is less wealthy than the other two cities, though still boasts the wealthiest counties—even excluding the not-so-real “county” of Falls Church, DC has half.

The discrepancy screams huge concentrations of wealth with rather disparate neighbors on the other side of town. There are simply fewer low income families in the counties on the list to bring down the average in the rich counties, and not enough wealthy families in the poorer counties to bring up the average.

Most disturbing are the consequences to social infrastructure. Income disparity often leads to the poorer areas getting the worst schools, hospitals, roads, etc. The only—mildly twisted—upside is that it lends some certainty to real estate investment. With the exception of gentrifying areas, you know where and what you’re buying. You can make what you want of the results—but there’s also some anecdotal evidence.

It turns out that citylab.com actually did a study of America’s most/least economically segregated areas. According to them, New York beats both the DC area with San Fran tailing closely. However, all three cities were in the top ten and scored from 6 – 7 on a scale of 1 – 10.

I would, however, venture to say that DC’s economic segregation is more egregious because it doesn’t have what statisticians would call such a long right tail. New York, as we can all appreciate, houses some of the world’s highest earners. Period. When you factor in those high-earning outliers, it can skew the averages to make pockets of wealth look—statistically—even more significant than they really are. After all, who cares whether your net worth is $10 million or $100 million—to me, you’re filthy rich, either way.

The same can be said for California and the Bay Area. In contrast, Washington DC doesn’t have quite such an exaggerated and exorbitantly wealthy class to throw it. On Forbes other famous list (America’s wealthiest people)—anecdotally, I’ll admit—CA and NY pop up repeatedly in the first 100, but there’s only one person from the DC area.

You can take this all as you will. And, I’ll admit, it’s largely based on supposition and synthesis of other people’s work. (But if I get enough criticisms/questions here, I could be swayed to look at the numbers!) Take a look around you though. If you’re from somewhere else—which you probably are—ask yourself whether it’s the same at home. Is it really that divided along the lines of rich vs. poor where you’re from? Let me know.

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