Why Do Household Incomes Typically Vary by Zip Code?


Quick Answer

Household incomes typically vary by ZIP code for a variety of reasons, including the economic stability of the area, the location of employers within that region and the availability of other resources relating to employment and quality of life. In many cases, ZIP codes include distinct geographic segments of a city, which can also contribute to living costs and earning potential.

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Full Answer

The economic state of a city has a strong influence on household income within its ZIP codes, as well as during comparisons between ZIP codes in different cities. This includes the presence of any major employers, the primary industry of the region, its population and the education level of residents. Areas with more job opportunities from more profitable companies typically feature a higher household income than economically depressed areas. Similarly, areas without access to features such as easy transportation, either as public transportation or highways, may have lower household incomes because it is harder for residents to get to jobs.

Another reason household income varies by ZIP code is that each ZIP code incorporates unique geography, which in turn affects how residents in that area live, such as proximity to natural resources or attractions that affect the cost of housing. As the cost of housing increases, the median household income in that area typically increases, because residents need to earn more to pay for the higher housing costs.

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