When It Comes To Income Inequality In America, College Towns Are Often The Worst

An entrance to Michigan State University, located in East Lansing, Michigan. East Lansing has one of … [+] the highest rates of income inequality out of some of America’s biggest college towns.

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Over the last 50 years, income inequality in America has grown substantially. According to the Economic Policy Institute (EPI), the growth in income from 1945 to 1973 was widely shared among the various income classes in the country. However, beginning in 1973 — notably, the year the United States fell into a 16-month recession, the longest at the time since the Great Depression — this trend of broad income growth reversed. From 1973 to 2007, more than half of all income growth was concentrated among the top 1% of families in the United States. Indeed, income inequality in America has now reached levels not seen since its historical peak in 1928, a time when the unregulated stock market fueled enormous gaps in income classes amid the so-called Roaring Twenties.

What’s interesting though is that some of the highest rates of income inequality can be found in America’s notable college towns. A recent study by BrokeScholar identified the biggest college town in every state, and when these college towns were analyzed in terms of their Gini index — a measure of income inequality, in which 0 represents perfect equality and 1 represents perfect inequality — they displayed marked wealth inequality when compared to the U.S. overall.

Read on to find out which college towns in America have some of the highest rates of income inequality.

Income Inequality in College Towns

Using the latest Gini index data from the newly released Census Bureau’s 2021 American Community Survey 5-Year Estimates, we analyzed the biggest college town in each state identified in the BrokeScholar study. Out of 50 college towns — one per state — 35 of them have a Gini index that is higher than the Gini index for the U.S. overall, which is 0.4818.

Some college towns have a Gini index that’s only a little higher than the national rate, such as Newark, Delaware — home to the University of Delaware — where the Gini index of income inequality is 0.4851. However, many other college towns have significantly higher income inequality than the country as a whole. The top five college towns by state that have the highest income inequality include:

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Storrs, Connecticut: 0.6612
Williamsburg, Kentucky: 0.5950
Athens, Ohio: 0.5917
East Lansing, Michigan: 0.5848
Pullman, Washington: 0.5804

The city of Storrs, home to the University of Connecticut, has the highest rate of income inequality by far. Its Gini index of 0.6612 is even higher than Miami Beach’s level of income inequality, which ranked as the No. 1 city with the worst income inequality in America in a recent Forbes study. Williamsburg, Kentucky is home to the University of the Cumberlands and also has an incredibly high rate of income inequality. Athens, Ohio, home to Ohio University, has a higher Gini index of income inequality than Atlanta, Georgia, which was the second-most unequal major city in that same recent Forbes study. And indeed, East Lansing, Michigan — home to Michigan State University — and Pullman, Washington — home to Washington State University — all have higher rates of income inequality than Atlanta.

Table of Income Inequality in America’s College Towns by State

Below you’ll find a table that details the main college town in each of the 50 states, as well as the largest college or university in that city, and its respective Gini index. College towns are ranked in order of highest income inequality to lowest.

Why Might College Towns Have Higher Rates of Income Equality

The reason why so many of these college towns have higher rates of income inequality is a more complex issue to address. A major reason could be that college towns combine people that live in the town who earn higher incomes as, say, college professors or staff at a university’s hospital, with residents who earn lower incomes working service occupations. The unequal distribution of incomes can be seen by exploring the college towns on the Census Bureau’s table of income in the past 12 months.

Looking at Storrs, Connecticut, for example, which has the highest Gini index, the median household income is only $23,964. And yet the mean household income is $71,147, which suggests that higher income households are pulling the average income in the town upward. In Storrs:

25.6% of households earn less than $10,000 a year
7% of households earn $10,000 to $14,999 a year
19.3% of households earn $15,000 to $24,999 a year
10.3% of households earn $25,000 to $34,999 a year

That means a full 62.2% of households in Storrs earn less than $35,000 a year. Meanwhile, on the other end of the spectrum:

9.5% of households earn $100,000 to $149,999 a year
3.9% of households earn $150,000 to $199,999 a year
12.7% of households earn $200,000 or more a year

Thus, while 62.2% of households earn less than $35,000 a year in Storrs, more than a quarter of households (26.1%) have incomes of $100,000 or more a year. This is just one example of how unequal household incomes can be in major college towns. And, unfortunately, income inequality in America continues to rise year after year.