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Bay Area income inequality lowest in California? Not so fast.

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How can this be?

It’s the oldest story in the book: The rich get richer, the poor get poorer, and the problem gets even more serious in boom times. These days we call that income inequality, and with the cost of living in the Bay Area flying to the moon over the last five years, the issue has become even more pointed than usual.

Overlooked in the midst of those concerns is a potentially controversial study released earlier this yea rfrom San Francisco-based think tank the Public Policy Institute. Their conclusion: The gap between rich and poor has indeed grown wider in the Bay Area over the past nine years. But it’s the smallest shift in income inequality in the entire state.

The difference between the net value of the Bay Area’s wealthiest residents relative to the value of the least wealthy (the 90/10 ratio, where researchers divide the median income of the region’s 90th percentile of earners by the income of the 10th percentile) has gone up 9.9 percent since 2007.

And, yes, that does sound about right; it’s an enormous shift at an alarming rate of over one percent per year, reflecting a period when incomes first crashed and then soared.

But up around Sacramento, the same ratio jumped 36.8 percent. In the Central Valley, it was 25.9. Los Angeles' and Orange County’s results are comparably modest at 13.4 and 16.7, respectively, but that’s still quite aggressive compared to ours. Of the nine broad metro areas PPI surveyed, San Francisco new Gilded Age is the least gilded of all.

How can this be true?

Well, the first thing we should consider is that it might not be—statistics are slippery devils, and different people draw different conclusions about the same facts. As CalMatters points out, a Brookings Institute study from January used a different 95/20 ratio and found the San Francisco-Oakland-Hayward census area not only the worst in California, but third worst in the entire nation.

(Note that this was hailed as good news at the time, since we used to be number one.)

But let’s entertain the idea that PPI has it right. Two things might explain the trend: One, although the rich in the Bay Area are getting much richer, those earning the least haven’t seen their incomes diminish that much. The nine percent or so decline in the annual wages of the lowest strata of Bay Area earners is pretty serious. But in some counties outside of the area, the same figure is 30 percent or more.

This makes a degree of sense. San Francisco was never a cheap place to live to begin with, and median income has been steadily rising since 2011.

But there is another, more ominous possibility, one that’s not factored into the PPI study: It could be that we’re simply losing a lot of working families and low-income earners altogether. Indeed, back in April we found that San Francisco and Oakland are practically hemorrhaging their working class.

So maybe the reason the Bay Area’s poorest don’t appear to getting poorer is because they soon stop being part of the Bay Area.

It’s impossible to reconcile PPI’s findings with income migration, at least without doing the whole study over again. Taking the institute study at face value, it appears that if the rising tide isn’t raising all boats, it’s at least not sinking us all either. "It could be worse" is rarely an expression of comfort, but it’s much better than the alternative.