The other inequality is structural

February 3, 2014

For the second year in a row, the issue of economic inequality was featured in President Barack Obama’s State of the Union Address. Even some Republican lawmakers have now dared to speak the “i-word.”

Though Obama predictably avoided comparisons between the earnings held by the top 1 percent and the 99 percent of Occupy Wall Street fame, the message was familiar: The widening income gap between the very rich and everyone else is a stain on the social compact and a serious problem for future economic growth.

Focusing on this income inequality is crucial. Lower incomes create an oxymoronic class of “working poor.” Inadequate pay hurts consumption and reduces tax revenues. People simply do more for themselves with more money, growing it into wealth for future generations — and as a cushion against economic downturns. A good job, as the president said, remains the best access to the promise of opportunity.

But there is another inequality that the president and others fail to address at the nation’s peril — structural inequality. This is the very foundation that reproduces widespread income gaps, the ground beneath the feet of income inequality.

It is not an abstract idea. We experience structural inequality — see it in the quality of local schools and their test scores, smell it in the access to healthy food or not, feel it in a sense of safety or danger as we walk the streets.

The American dream is more than a job or an income. It is a series of social and economic relationships we have with tangible resources close to home. A growing number of communities now lack the resources for that dream, which other places take for granted.

All these resources reach us through local institutions — schools, supermarkets, public services — whose relative quality can promote or inhibit economic opportunity. Fresh food can yield a longer life with fewer health problems. A strong educational system offers better preparation for a well-paying job. From early in life, the places we inhabit have everything to do with our life chances — including the income we’ll ultimately make.

When we think about income inequality, we think about ways to make more money. But when we think about structural inequality, we’re concerned with how to get people the resources for lasting economic opportunity — including money. These two components of inequality, though linked, require different policy answers.

For example, when we learn that seven out of 10 Americans born into poverty will remain in poverty, we’re also learning that they live in poor neighborhoods, attend schools that offer limited educational options, depend on overburdened local institutions and are mired in economic instability. They live in neighborhoods where only impoverished choices abound — with no apparent way out.

This is the essential finding by Harvard researchers in a new study about economic mobility. People’s fortunes, they found, strongly correlate to their parents’ status. Yet the researchers also found that the ingredients of mobility require certain structural components — including low residential segregation, low income inequality, better primary schools, greater social capital and more family stability.

In my own recent analysis of U.S. inequality, I found that income profiles closely follow residential profiles. Far more than pluck and merit are needed to get into the middle class. The local infrastructure is key.

Greater resources in the surrounding environment may help the working class or poor overcome other, more personal, deficits by offering wider options. For example, attending a strong school with engaged teachers and classmates is a resource for the child of an alcoholic or depressed parent. The institution itself helps to foster resources within her to strive for and explore productive options. The presence of supportive community resources and the absence of debilitating ones has been a mainstay of middle-class life since the New Deal.

The challenge is that many more places now confront the same economic instability that their residents face. Cities and towns are experiencing declining tax bases because of high unemployment and foreclosure rates, while their pension, education and infrastructure costs soar. Like their residents, these places struggle to remain middle class.

Other communities are simply overmatched by the fiscal demands of increasing poverty. With dwindling help from state budgets, they cannot hope to become middle class.

The geography of opportunity that marked our nation has become the geography of inequality. It can be mapped by both economics and race.

New Orleans offers a telling example. In 2005, the United States learned a devastating lesson in structural inequality when Hurricane Katrina struck the Crescent City. Low-lying neighborhoods, poorer and overwhelmingly black, were disproportionately vulnerable to flooding and destruction. The infrastructure was weaker and many residents lacked the resources to manage such a catastrophe over time. Their poverty was already legendary, but their structural inequality proved heartbreaking.

Now, with the flood waters long gone, the city is again in a struggle between the bountiful resources available to residents in the predominantly white and wealthier western neighborhoods on the high ground and those low-lying, poor, predominantly black neighborhoods in the east, for whom recovery has been painfully slow.

Would income-supporting policies help poor and working-class people? The Obama administration wants to raise the federal minimum wage. Sure, an executive order (for federal workers) would add needed money into the budgets of many struggling families.

But the problem of unequal opportunity is obviously far larger. The schools, home values, job networks, infrastructure, food stores and transportation options of an area all contribute to a sense of opportunity — or to its opposite, instability and isolation.

Americans are good at evaluating nuanced differences in residential quality. We can spot a “good” area instantly and a “bad” one a mile away. Like the three rules of real estate — location, location, location — we know just what to want, what to tolerate and what to avoid at all cost. The fact that neighborhoods are unequal in America is not news to Americans; it is one of the ways we measure mobility.

As our resources dwindle, however, many of us are experiencing the instability known by much poorer families and the places they live. Economic uncertainty forces us to adjust our standards — in the colleges we attend, the debts we incur, the risks we will take. We get less at greater expense and make less at greater cost.

Our own uncertainty matches the fiscal constraints of our towns and neighborhoods. Gradually, we see the communities we once prized lose valuable resources — class sizes increase, services are cut, taxes go up while home values stagnate. And that’s when we feel it: that prized place to live that brought so much may never bring as much again. We are falling behind and can do nothing about it.

This is structural inequality at work. The patchwork of have and have-not neighborhoods and towns corresponds to the distribution of have and have-not households. We are not our environments, but when it comes to opportunity there’s a striking resemblance. Too often the reflection in this mirror is a predictable detector of skin color. And the more you are perceived as an outsider with nothing to contribute, the harder it is to get inside.

Income supports only indirectly reach this broader problem of inequality. Opportunity is far more than money. The question is, what kinds of policies address structural inequality?

The answers need not be only federal — since partisan gridlock blocks much necessary effort — but based on what state and local governments can do. Addressing the resource imbalance among communities requires an acknowledgment that inequity breeds inequality. Policies that allow the systematic exclusion of low- and moderate-income families are inequitable and unfair. We need states and municipalities to champion greater equity and integration of the resources that promote opportunity.

What does that involve? At the state level, it can mean policies that address the inequality of resources among cities and neighborhoods. Equitable spending policies can be enforced through laws that target funding for transportation and infrastructure in the nation’s growing diverse and inclusive yet fiscally stressed inner-ring suburbs, where many new entrants to the American dream now live. Isolation from growth diminishes opportunity. These older, more densely populated areas should be the focus of mass transit investments, so that their residents have greater connection to areas of higher job growth.

Another idea is tax base revenue sharing to help struggling areas enjoy the benefits of regional growth around them. This spreads some of the growth gains of a handful of fortunate localities to their neighbors. Under Minnesota’s Fiscal Disparities Act, for example, regional legislation ensures that poorer municipalities don’t spiral into budget deficits that limit opportunity for their residents while others prosper.

That’s equity. As for integration, a mountain of research has shown that desegregation — the sharing of spaces, communities, benefits and burdens –has reduced costs for everyone touched by it while promoting the advantages of diversity. Montgomery County, Maryland, has been a model of innovation in using inclusionary zoning and other means to embed affordable housing within middle-class communities. Enlarging the geographic scope of housing vouchers can have similar effects.

The focus here should be on mixed-income educational environments and housing choice. Localities can demand fair shares of regional levels of affordable housing and poverty populations. Imagine the landscape of opportunity if, at the urging of localities that have rising concentrations of poverty, states implemented policies to ensure that there are no neighborhoods or census tracts in which more than 10 percent of families are poor.

Taking the necessary steps to reach that goal would mean making ghettoes extinct. Yet towns and cities thinking regionally can do this.

Structural inequality has been long in the making. It will not be quickly addressed. Undoing it requires that we, the public, make clear that we want each other’s success —for the greater good.

In my hometown of New York City, a new mayor, Bill de Blasio, just won office by campaigning on diminishing the economic inequality that has come to define one of the world’s great cities. It would be facile to attribute de Blasio’s election to “class warfare.” But that cannot be the whole story — not when he won with more than 70 percent of the vote. What it says is Americans do not want to live in a metropolis of have-mores and have-lesses because it destroys the fabric of community that can sustain us all well into the future.

Like it or not, we are in this together — tied in a single garment of destiny.



PHOTO (INSERT 1): The Michigan Central Train depot sits vacant just west of downtown Detroit, Michigan, October 28, 2011. REUTERS/Rebecca Cook

PHOTO (INSERT 2): A lock secures an iron gate at the entrance to the closed George Washington Elementary School in this picture taken in Philadelphia, Pennsylvania, September 5, 2013. REUTERS/Tom Mihalek

PHOTO (INSERT 3): The abandoned Fisher Body 21 plant designed by Albert Kahn and built in 1919 to produce bodies for Buick and Cadillac, is seen east of Woodward Avenue near downtown Detroit, Michigan, June 27, 2009. REUTERS/Rebecca Cook

PHOTO (INSERT 4): Detroit resident Riet Schumack shows her community garden as she talks about the two empty lots behind her she hoped to bid on during the Wayne County tax foreclosures properties auction of almost 9,000 properties in Detroit, Michigan, October 21, 2009. REUTERS/Rebecca Cook


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A very thought provoking article Professor Troutt, thank you!

Posted by ltcrunch | Report as abusive

Mayor de Blasio just pandered votes. Apparently his “plan” is to force the upper east side to just leave. Yep, you’ll have income equality in NY then.

Posted by tmc | Report as abusive

Upgrading and repairing infrastructure is key to economic prosperity

Posted by Leftcoastrocky | Report as abusive