Washington Is Not the Wealthiest Area in America

The press would have you believe it is. But the statistics tell a different story.

by Nate Cohn | March 8, 2013

photo credit: Dougtone/Flickr

The riches of recession-proof Washington, a media obsession for years now, was bound to be a source of resentment for struggling Americans—and understandably so. The region's wealth really is at the expense of the rest of the country, since it's fueled by tax revenue and deficit spending. But this resentment has been inflamed by breathless reports that Washington isn't just affluent, but opulent: the wealthiest metropolitan area in the country. From this perspective, the sequester is the capital's comeuppance, an act of economic fairness that returns Washington's unearned and extravagant bounty to the exploited hinterlands. Last week, for instance, The New York Times wrote that the automatic spending cuts are ending Virginia's "feast on U.S. funds." There's just one problem with this narrative: Washington isn't actually wealthier than similar metropolitan areas.

Certain statistics are indeed stunning. The D.C. metro area is home to eight of the eleven U.S. counties with the highest median income, including the top three: Loudon, Fairfax, and Arlington—all in Northern Virginia—are the only counties in the country where median incomes exceed $100,000 per year. In comparison, Palo Alto's San Mateo County is just $85,000 per year, while Westchester, New York, or Fairfield, Connecticut, register just above $75,000 per year. Based on these figures, the conventional wisdom holds that Washington commands wealth exceeding the country's more productive centers of finance (New York), technology (Silicon Valley), or entertainment (Los Angeles). But median income doesn't tell the whole story, since it only looks at the average person—the fiftieth percentile. That's useful for measuring broad-based prosperity, but the wealth of a superrich one percent or desperate poverty doesn't move median income by one dollar.

The alternative is average income (or per capita income), which has problems of its own. It might make a Gulf state, with a superrich one percent and desperate poverty otherwise, look like the most prosperous place in the world. That's why we usually use median income for measuring prosperity. But there are several reasons to consider per capita income when evaluating Washington's wealth. The implication, in many press accounts, has been that the D.C. area has a disproportionate share of the national income, not just that its middle class residents are better off—but as statistics on per capita incomes show, only the latter is true. Furthermore, the complaint that the government bankrolled the region's boom makes it all the more important to consider how many of those dollars went not just to the fiftieth percentile, but the 1 percent, too.

Despite Washington's high median incomes, its per capita income is comparable to other large, affluent, coastal regions. Among large metropolitan areas, San Francisco-Oakland leads the country with a per capita income of $61,395, followed by San Jose ($61,028), Washington ($59,345), Boston ($57,893), and New York ($56,770). Similarly, when it comes to per capita income at the county level, the Washington area's dominance evaporates. New York County (Manhattan) surges to the top with a per capita income of $111,386, while only Arlington and Alexandria make the top ten at $79,967 and $76,362, respectively—about 30 percent less than Manhattan. New York's large suburban counties, including Westchester, Fairfield, Somerset, and Morris, all leap ahead of suburban Washington counties like Fairfax, Loudon, and Montgomery. Loudon County, ostensibly the nation's "richest" county, doesn't even make the top 25 counties by per capita income.

Why do Washington counties dominate in median income, but not in per capita income? Partly because the region's wealth is distributed far more equitably among its residents than other cities—its middle class is better off, but its upper class isn't as wealthy. Whether Washington's upper-middle class is affluent because of government largess or because of an unusually well-educated workforce (or both), it's undeniable that the "one percent" are more affluent in New York or San Francisco than they are in Washington. Financiers or executives making millions per year drive up New York's per capita income to more than $110,000, well ahead of anywhere else in the nation. Indeed, while Washington is home to eight of the top ten counties by median income and two of the top ten by per capita income, the Washington area only has two of the 100 wealthiest places with more than 1,000 residents (#23 Chevy Chase, #59 Great Falls). New York, New Jersey, and Connecticut combine for 31 places on that list. Since the superrich exert no weight on median income, Washington gets depicted as wealthy for its large upper-middle class, while severe income inequality, of all things, shields New York from the perception of opulence.

The sky-high median incomes of Washington's most affluent counties aren't just because of a more equitable distribution of wealth—they're also enhanced by greater segregation. Longstanding racial and class segregation have confined working-class residents to the eastern half of the Washington metropolitan area, leaving the western, affluent counties with few lower-middle class residents. For instance, just 16 percent of households in Loudoun County make less than $50,000 per year, and just 19 percent in Fairfax do. The counties of the New York metropolitan area aren't nearly as divided along class lines. That's not because New York isn't segregated, just that the relevant divisions are beneath the county level: New York County includes both the Upper East Side and Harlem; Mr. Gatsby's Kings Point shares Nassau County with diverse and working-class areas east of Queens; Fairfield County includes Greenwich and the deeply impoverished post-industrial town of Bridgeport. Consequently, there are twice as many households making less than $50,000 in New York's most affluent counties than there are in Loudon: 31 percent in Fairfield, 42 percent in Manhattan, and 33 percent in Westchester. If metro New York were segregated by county, like Washington is, the median income of Fairfield or Westchester would probably exceed Loudon's.

So Washington's wealth isn't quite as the press has painted it. But one could argue, if so inclined, that the region is still too rich. Why should a metro area largely supported by federal tax dollars possess wealth comparable to more productive cities like New York and San Francisco? It's a fair question. But it's not fair to resent Washington on the false basis that it's the country's richest region. Perhaps, instead, the capital's egalitarian distribution of wealth should be admired, especially at a time when income inequality nationwide is at levels not seen since the 1920s. Or maybe we should just run the town like a corporation by paying President Obama $400 million per year, giving multi-million dollar bonuses to representatives for passing bills, and trimming government salaries accordingly. Then the region's median income would plummet, and no one would have cause to complain anymore about Washington's riches.

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