Booming College Towns May Face Income Disparity

College towns increasingly attract new residents as they offer ample job opportunities, cultural events and lower home prices than city averages, but there may be a dark side to life in these communities: high income inequality.

While some of the areas experiencing the highest population growth across the country are college towns, the influx to these communities could see income inequality worsen as the town's original residents face lower pay than their new higher-educated and higher-earning peers.

Income inequality across the country has reached a record high since its original peak in 1928. But booming college towns tend to boast the highest income inequality rates in the country.

An analysis by Forbes of the biggest college towns in every state using the Gini index revealed a significantly higher rate of income inequality than the rest of America. In fact, out of 50 college towns, 35 had a Gini index higher than the American average, which rests at 0.4818.

The Gini index is a commonly used measure of income inequality and can indicate where there are large gaps between certain groups in a population when it comes to salary and wealth.

Worst Towns for Income Inequality

In the Forbes Gini index analysis, some college towns were closer to the national average than others. Still, some rose to the top, offering a sufficiently higher income gap than what might be expected in a college town.

The top five highest-income inequality college towns were the following:

• Storrs, Connecticut: 0.6612 (University of Connecticut)
• Williamsburg, Kentucky: 0.5950 (University of the Cumberlands)
• Athens, Ohio: 0.5917 (Ohio University)
• East Lansing, Michigan: 0.5848 (Michigan State University)
• Pullman, Washington: 0.5804 (Washington State University)

All five are home to universities with a large population of the towns centered around education or research from those schools. All five also have a higher rate of income inequality than Atlanta, Georgia, which is the second-highest income disparity major city in the country.

But what is actually driving these rates of income inequality? It's a mixed bag, experts say.

For one, the occupations of college town residents tend to be split into two groups: college professors and hospital workers, and everyone else, who tend to work in lower-paying service jobs.

And many of the college towns with the highest rates of income inequality are located in small, rural areas, said Matthew Dimick, a law professor at the University of Buffalo with expertise in income inequality.

"Rural towns tend to be poor," Dimick told Newsweek. "On the other hand, university professors are typically better paid, probably above the average median salary. Put those things together, and you have a recipe for inequality: poor residents along with better-paid professors."

Dimick attended Cornell University for law school, where he experienced the divide firsthand. The surrounding area of Ithaca was poor and rural, while the university professors and administrators racked in more money than the average resident.

At the same time, the more tech companies that these college towns and surrounding areas attract due to their college graduate talent may further the financial gap.

In Chapel Hill, North Carolina, the home of UNC Chapel Hill, the Gini index sat at 0.5496, still significantly higher than the national average. This could potentially get even worse as the nearby Research Triangle grows and attracts more tech companies to the area.

Already, Meta and Apple are establishing a presence in the region, and the new high-income jobs are likely to create an even greater rate of income disparity, potentially pushing taxes and overall cost of living up for the area's original residents, as well.

In Storrs, Connecticut, the gap likely persists once again due to the types of jobs the University of Connecticut brings to the area compared to the rest of the population. Altogether, 62.2 percent of households earned under $35,000, and yet a whopping 26.1 percent earned more than $100,000, skewing the average, the study found.

Implications of the College Town Population Boom

While colleges are experiencing a shrink in the number of undergraduates, more educated workers are able to set up shop there due to the rise of remote working, according to Kim Weeden, a professor in the Department of Sociology and Center for the Study of Inequality at Cornell University.

"Most of the recent boom in college towns is likely from highly educated workers who can work remotely and who are attracted to college towns because of their relatively affordable housing, good public schools and cultural and recreational amenities," Weeden told Newsweek.

While highly educated workers with advanced degrees tend to command high salaries, college students often stay at low or even poverty-level incomes, Weeden said. The mix of administrative assistants, dining hall workers and other campus staff can also bring the median income down, despite there being a strong population of high earners.

As college towns continue to boom and attract higher-paid workers, experts say to expect a shift in the average resident who can still afford to be there.

"A surge in population is likely to drive up the costs of housing and childcare, putting pressure on lower-income residents, including those who work at the college, to move further out into the surrounding communities," Weeden said.

While this shift has the potential to technically lower the state of income inequality in those towns, college towns could be at risk of pushing their original residents out completely.

"Barring major efforts to increase housing stock, this could reduce income inequality within college towns as poorer residents leave, but increase inequality between college towns and neighboring towns," Weeden said. "It's the same dynamic as gentrification of a neighborhood, but on a bigger geographic scale."