A growing divide between rich and poor in Texas

01/28/2014 7:48 PM

01/29/2014 4:20 PM

The burgeoning national debate over income inequity hits home in Texas, where the growing divide between the rich and the poor is increasingly centered on race, ethnicity and education.

Texas ranks fifth in income inequality among states, according to research by Mark Frank, an economics professor at Sam Houston State University who uses state-level data from the IRS to determine the income share of the top 1 percent and top 10 percent of earners.

Texas trails only New York, Connecticut, Florida and California, according to his data from 2011.

“You have a real difference between the lives of some and the lives of others in Texas,” Frank said Tuesday.

And that income gap is widening.

“The data for 2011 shows that the top 10 percent earned about 48 percent of all income in the state. The top 1 percent are getting nearly 21 percent of all income,” he said, just hours before President Barack Obama challenged Congress and the nation to do something about income inequality.

“For 2012, I wouldn’t be surprised if we cross the 50 percent threshold for the top 10 percent,” Frank said.

A common thread in states with the highest inequality is that they have big urban areas, Frank said, noting that wealth is increasingly centered in metro areas.

“There is a real correlation in having urban areas and having wide income gaps,” he said, adding that another factor in Texas is the substantial pockets of poverty in the Rio Grande Valley.

In the Gini index, another widely used measure, Dallas-Fort Worth ranks 34th in income inequality among the nation’s 100 largest metro areas.

McAllen, in the Rio Grande Valley, is No. 5, El Paso is No. 7, and Houston is No. 10 in the Gini index for 2010, according to the Diversity Data project at Harvard University.

In a 2012 analysis of income trends by the Center on Budget and Policy Priorities, Texas ranked seventh-worst in the gap between rich and poor. The incomes of the richest 5 percent of households were 14.3 times bigger than those of the poorest 20 percent.

Steve Murdock, a former Texas state demographer and director of the U.S. Census Bureau, believes the state’s income gap is “a manifestation of racial and ethnic differences, which is a manifestation of education.”

In 2010, the poverty rate in Texas was 14.4 percent. The rate dropped to 10.8 percent for non-Hispanic whites but soared to 27.1 percent for blacks and 24.8 percent for Hispanics, according to the Census Bureau.

“When you look at poverty rates for African-Americans and Hispanics, they are two or three times as high as they are for non-Hispanic whites. Blacks and Hispanic incomes are 60 to 75 percent compared to whites,” said Murdock, who runs the Hobby Center for the Study of Texas at Rice University.

Education is vital

Education is the key to closing the income gap, said Murdock, who has a new book coming out in February, Changing Texas: Implications of Addressing or Ignoring the Texas Challenge, which uses census data to predict how the state will evolve through 2050.

“Historically, education has been among the single best predictors of economic resources — income, wealth and ownership,” he said.

“Part of what we are saying in this book is that if we don’t change educational levels, Texas will be poorer and Texas will be less competitive,” Murdock said.

Educational attainment among the races closely parallels the poverty figures. Non-Hispanic whites in Texas are three times as likely as Hispanics to hold a bachelor’s degree or more, according to the census bureau’s 2010 American Community Survey.

Murdock said education buoyed previous waves of ethnic newcomers.

“Education is one of the levelers. I think education has been the factor that brought the Irish up, the Germans up and the Italians up,” he said.

“Getting that minority education rate up is a key. And a lot of it is early childhood education. It’s education from the get-go,” Murdock said.

Frank agrees that the income divide is all about education.

“Education really correlates well with income inequality,” he said. “That’s the education gap we face in Texas, and closing the gap is a real challenge.”

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