BRIDGEPORT, Conn.—Few places in the country illustrate the divide between the haves and the have-nots more than the county of Fairfield, Connecticut. Drive around the city of Bridgeport and, amid the tracts of middle-class homes, you’ll see burned-out houses, empty factories, and abandoned buildings that line the main street. Nearby, in the wealthier part of the county, there are towns of mansions with leafy grounds, swimming pools, and big iron gates.
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Bridgeport, an old manufacturing town all but abandoned by industry, and Greenwich, a headquarters to hedge funds and billionaires, may be in the same county, and a few exits apart from each other on I-95, but their residents live in different worlds. The average income of the top 1 percent of people in the Bridgeport-Stamford-Norwalk metropolitan area, which consists of all of Fairfield County plus a few towns in neighboring New Haven County, is $6 million dollars—73 times the average of the bottom 99 percent—according to a report released by the Economic Policy Institute (EPI) in June. This makes the area one of the most unequal in the country; nationally, the top 1 percent makes 25 times more than the average of the bottom 99 percent.
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In some ways, this is a mathematical artifact: Any place where rich people live will have greater inequality, since incomes can go up practically infinitely but they can only fall so low. Yet what’s troubling is that the well-off’s rise seems to be providing no upward pull for those at the bottom. From 2009 to 2013, the incomes of the top 1 percent in Connecticut grew 17.2 percent, while the incomes of everyone else dropped 1.6 percent. As wealth grows in Connecticut, the state’s biggest city, Bridgeport, is left behind. The poverty rate in Bridgeport has increased from 18 percent to 20 percent from 2007 to 2015, according to a report from the nonprofit Connecticut Voices for Children.
That leads to a crucial question: Why? Why are the sky-high incomes at the top not pulling up those at the bottom? And is it possible that the struggles faced by those in Bridgeport are somewhat caused by the good fortunes of those who live in Greenwich?
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On the surface, the reasons behind Bridgeport’s poverty and Greenwich’s wealth do not seem related. Bridgeport is struggling because it is a one-time manufacturing hub whose jobs went overseas as factories moved away in the late 20th century. Greenwich became a home for New York City financiers who wanted to live somewhere a little more bucolic than New York, and later hedge-fund managers decided they could work closer to home and set up their companies there, too.
These two towns have different fates in part because of two distinct dynamics in the American economy. Yet there are economists who believe that there is a link between the improving prosperity of the wealthy and the eroding bank accounts of everyone else. The reason? It’s two-fold: First, there is the rise of the financial industry, which has fueled extraordinary wealth for a very few without creating good jobs down the line; and, second, a tax policy that not only fails to mitigate these effects, but actually incentivizes them in the first place. It’s probably not surprising, then, that the 10 states with the biggest jumps in the top 1 percent share from 1979 to 2007 were the states with the largest financial service sectors, according to the Economic Policy Institute analysis.
Indeed, the growing wealth of Connecticut can be tied to the rising fortunes of the financial industry. The three richest towns in Fairfield County—New Canaan, Darien, and Greenwich—are home to hedge-fund managers, chief executives, lawyers, and accountants. Around 200 hedge funds call Connecticut home; the state is second to only New York in terms of the amount of funds under management, with $300 billion, according to Bruce McGuire, founder of the Connecticut Hedge Fund Association.