Following the money
Income in well-to-do towns is rising fast, widening the gap with the middle class
If the past is any indication of future trends, the chasm between wealthy and poor neighborhoods is likely to expand in the coming years as the region's well-heeled families enjoy rapid gains, while less affluent households struggle to keep pace with inflation.
A peek at area residents' average incomes, grouped by ZIP codes, finds a growing rift between the haves and have-nots. With tax day looming on Tuesday, the Globe looked at the average income by filer in every ZIP code in the state. The information, provided by the Internal Revenue Service, provides a tantalizing glimpse of how neighborhoods fared financially from 2001 through 2005, the most recent year for which figures are available.
"Society is becoming more segregated by income," said Marc Draisen, executive director of the Metropolitan Area Planning Council, a regional planning agency, commenting on the IRS data and other studies completed over the past decade. He noted that the gap between rich and poor communities "definitely plays itself out in the quality of the services you can afford at the local level, including schools."
In most cases, although not all, the average income of filers living in the region's most affluent neighborhoods grew at a much faster rate than it did for those living in less prosperous areas. In ZIP code 02478 in Belmont, better known as Belmont Hill, for example, the average income rose from $81,831 in 2001 to $117,300 in 2005, whereas in ZIP codes in urban Lawrence and Lowell, the average income failed to keep pace with inflation or, worse, declined. (The IRS figures were not adjusted for inflation).
Although the average gain in area communities, of 8 percent, was below the statewide average gain of 13 percent, the average income per filer in the northwest suburbs was $82,155, well above the statewide average of $67,419.
Locally, Belmont Hill, which counts former governor and presidential candidate Mitt Romney among its residents, showed the largest increase in income between 2001 and 2005, at 43.3 percent. Only three other ZIP codes posted gains of more than 20 percent: 01451 in Harvard (31.3 percent), 01450 in Groton (30.5 percent), and 02421 in Lexington (28.9 percent). In each of those ZIP codes, the average income in 2005 topped the six-figure mark: 01451 in Harvard, $169,370; 01450 in Groton, $118,081; and 02421 in Lexington, $159,547.
At the other end of the spectrum, five ZIP codes saw average income decline between 2001 and 2005, led by 01719, which straddles Acton and Boxborough. That ZIP code saw a decline of 6.3 percent, although income there was still a respectable $97,692.
Lawrence filers had the lowest average incomes both in 2001 and 2005. The three ZIP codes in that city had average incomes in 2005 of $20,810, $23,195, and $31,705. Only South Lawrence, ZIP code 01843, saw an increase. However, the gain was only 1.1 percent.
The other Lawrence ZIP codes saw declines in income between 2001 and 2005, with 01840 suffering the greatest dip, 6.1 percent. Lawrence residents in 01841 saw a decrease in income of 1.8 percent.
Lowell residents, also near the bottom of the earners' scale, experienced modest gains, ranging in the city's four ZIPs from 0.7 percent to 7.6 percent. But despite those gains, the highest average income remained stubbornly low - $42,543 in ZIP code 01852, for example.
Overall, 11 of the 45 ZIP codes in Boston's northwest suburbs posted double-digit percentage point gains in income from 2001 to 2005. More than half - 29 - showed modest increases of 0.1 percent to 9.8 percent, including Concord's 01742 ZIP, which had the highest average income in the region in 2005, $214,521, up from $195,353 in 2001.
The top income in the state was in Weston's 02493, an eye-popping $531,374.
The data showing a widening income gap between the rich and poor in Massachusetts illustrate an alarming national trend, local analysts say, noting that the economic divide threatens to make real former US senator and presidential candidate John Edwards's oft-used metaphor "two Americas." Several analysts said the IRS figures and other studies point to the growing disparity in the earning powers of white-collar and blue-collar workers.
While white-collar jobs have done well, blue-collar jobs in manufacturing and support have been sliding, said Robert Cuomo, dean of the Girard School of Business at Merrimack College in North Andover. He attributed the decline, in part, to jobs moving overseas.
"Those in high tech and others at the upper end of the wage scale are doing better because their opportunities are global and they're investing in international markets," Cuomo said. "Those at the low end of the wage scale are competing with Chinese and Indian workers for jobs, so at the bottom end there are a lot of depressed wages and unemployment. This is something we expect to continue for a while. Until wages in China and India rise to the level of those in the US, we're going to see the dampening down of wages, particularly for manufacturing jobs. It may take five or even 10 years to work itself out."
Noted Robert Forrant, professor of regional economics and social development at the University of Massachusetts at Lowell: "In the first 25 years after World War II, the gap between the wealthiest 20 percent of Americans and the bottom 20 percent was closing dramatically, thanks to social programs like the GI Bill, which produced an incredibly talented generation of scientists, engineers, and business leaders who otherwise would not have had the opportunity to go to college. But since 1970, the gap has widened and is now wider than it has been at any other point since 1945. Everything now is about cutting social programs, not expanding opportunities.
"In the past, the idea was always that each generation would do somewhat better economically than the generation before," added Forrant, who tracks employment data in the state in general, and Middlesex and Essex counties in particular. "Unless we find a way to turn things around quickly, we run the risk of seeing that change."
Matt Carroll of the Globe staff contributed to this report. Brenda J. Buote can be reached at bbuote@globe.com. 