CI Notebook

Fall 2011

Author(s): Laura Choi, Federal Reserve Bank of San Francisco

Last year, Proctor & Gamble introduced a new discounted dish soap line as part of its growing offering of lower-priced consumer products.  At the same time, the company launched its most expensive skin care regimen ever, designed to rival pricey department store brands.  According to a recent Wall Street Journal article, P&G is strategically targeting its products to the higher-end and lower-end markets, while ignoring the middle, and they’re not alone.  A number of American companies are recognizing that the consumer market is polarizing, with growth at both ends, and erosion in the middle.  This "consumer hourglass" is reflective of a broader trend of increasing income inequality in the United States.  As a larger share of total income becomes concentrated among the country’s top earners, low- and moderate-income (LMI) households are forced to make do with less.  This is particularly concerning as these households were already stretched thin; further financial constraints threaten to destabilize these households and the neighborhoods in which they reside.

This issue of Community Investments explores the issue of income inequality from a community development perspective, examining the broad trends that have contributed to its rise as well as the impact of inequality at the individual and community level.  The articles consider different facets of income inequality, such as the geographic segregation of income groups at the neighborhood and regional level, and the increasing polarization of the labor market.  A "Community Perspectives" thought piece examines the causes and consequences of the broad changes in income distribution. In addition, we address the impact of poverty stressors on LMI households and consider how the Great Recession has impacted income inequality.  Our "Eye on Community Development" section highlights important advancements in the community development field, including the CDFI Bond Program and new approaches to addressing adult literacy.

We hope this issue of CI sheds light on the complex topic of income inequality in the United States, and more importantly, on the community development field’s role in addressing it.  We believe the field can leverage various programmatic and policy responses to help build the incomes of LMI households and place more individuals on the path to upward socioeconomic mobility.  As always, we welcome your comments and suggestions and hope that you will join in the discussion.


Other articles in this issue

Addressing Widening Income Inequality through Community Development

Ties that Bind: Income Inequality and Income Segregation

The Polarization of Job Opportunities in the U.S. Labor Market

Community Perspectives: Widening Inequality Hurts Us All

Stressing Out the Poor: Chronic Physiological Stress and the Income-Achievement Gap

CDFI Bond – Opportunity of a Decade

Building Literacy Skills and Transforming Lives

Research Briefs

Doctor CRA

Data Snapshot: Income Inequality