Washington, D.C., is the third best city in the United States for building wealth in 2016, according to a report released Oct. 24 by consumer financial services website Bankrate.

The report identified the top 21 cities in America most conducive to building wealth, ranking the District behind San Francisco, Calif., and Minneapolis, Minn. The study has been conducted for two consecutive years and this year saw D.C. fall from second to third in the rankings.

Bankrate Mobile Editor and Analyst Claes Bell, who designed the study and completed most of its analysis, said an interest in household wealth creation and its widespread impact on daily life inspired the report.

“People think a lot about income, they can probably tell you what they made last year, and the year before that and the year before that, but they probably can’t tell you what their net worth is,” Bell said. “Wealth can be used to pay for college, a house down payment or saved in a retirement account. Accessible wealth allows individuals to pay for any needs they encounter.”

In the report, Bell identified five specific categories used to judge which cities promoted building wealth. These categories are savable income, which refers to the difference between money earned and the amount that can be saved and invested, human capital, which includes the skills and knowledge of residents, access to financial services, homeownership benefits and debt burden.

In D.C., the average savable income is the second highest of cities across the nation at $15,246. San Francisco ranked first in savable income with a difference of $16,657.

At 64.2 percent, the rate of homeownership in the District is slightly above the national average of 63.5 percent. The data for the homeownership analysis came from a combination of statistics from the 2016 U.S. Census Bureau and the National Association of Realtors.

Georgetown economics assistant teaching professor Mustafa Karakaplan said he thought homeownership had particular weight in D.C., where it may be harder to purchase a home.

“Land is scarce in D.C., and owning a house is a valuable form of investment. So that plays an important role in the homeownership benefits component of their criteria,” Karakaplan wrote in an email to The Hoya.

Georgetown University Center on Education and the Workforce Chief Economist Nicole Smith, who is also a research professor, said there is a connection between wealth building and education.

“A significant number of the jobs in Washington, D.C. definitely require education and training beyond high school, to the point beyond even a bachelor’s degree,” Smith said. “What that means is there’s a sort of rough rule of thumb: ‘The more you learn, the more you earn.’”

Smith said though the District should celebrate the reports of financial benefits in the city, Georgetown students should also give attention to D.C.’s income inequality.

“When we talk about the high incomes in Washington, D.C., we almost forget that there’s a great amount of inequality as well,” Smith said. “We have a social responsibility at Georgetown University. If we consider ourselves part of the affluent part of the city, there’s a social responsibility to give back.”

Smith said a key factor in D.C.’s wealth disparity is access to higher education.

“Georgetown University as a whole can reach out to more of our high school kids in Washington, D.C., to ensure that there’s a transition for D.C. kids to have an opportunity to have Georgetown education,” Smith said. “If you look at America’s poor and you look at some characteristics, a lot of our poor are not able to connect to jobs that can offer them a middle class wage, because they just don’t have the required education.”

Karakaplan agreed that income disparity and unemployment should be considered as well as the positive aspects of the report but said education and overall productivity could counteract these factors.

“It is true that the income disparity and unemployment rate in D.C. are larger than the national averages. These variables would impact the human capital component of their criteria,” Karakaplan wrote. “However, there are very good education opportunities in the D.C. area, and productivity is high.”

According to Bell, the report is important to help people understand how to increase overall wealth, which involves the different factors considered in the study.

“If you don’t have a positive net worth, if you don’t have the ability to access some household wealth, it’s going to make that much more difficult,” Bell said. “Wealth is tied up in all of these things, and it’s not something we think about much. I want to get people thinking about what are some things that help people build wealth and what are some things that are impediments to building wealth.”

Karakaplan said students should value the results of the report, even if they do not plan on staying in D.C. for a career.

“This is the second year that they have run this analysis and Washington, D.C., is once again one of the top cities, which definitely is good for everybody in the D.C. area including Georgetown students and the Georgetown community in general,” Karakaplan wrote.

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