Housing Inequality the Leading Cause of Wealth Inequality

New research and mapping projects reveal how the deeply embedded racism of planning and housing policies of the past are connected to the growing wealth gap of the present.1

The causes and consequences of income inequality have been heavily debated in the U.S. for decades, and is also one of the most divisive political debates among voters today. Regardless of what the political left or right believes to be true about what causes economic inequality, one fact is undeniable: the income gap between US’s top earners and everyone else is growing with no signs of slowing down. The following graph from the Center on Budget and Policy Priorities show the evolution of the wealth gap since the late 1940s.

According to leading economists and researchers, the primary drivers of wealth inequality include:

  1. Declining tax progressivity
  2. Technological advances
  3. Decline in union membership
  4. Decline in real value of the minimum wage, and
  5. Globalization

While each of these factors contributes in some capacity to the rise in wealth inequality, recent studies by researchers at MIT, the University of Illinois, and the University of Michigan suggest that housing inequality is the leading cause of wealth inequality. When referring to housing inequality, these researchers are talking about the higher cost of some houses over the cost of others.