The geography of opportunity
Something extraordinary is happening in Salt Lake City, Seattle and Pittsburgh and in the suburbs surrounding them, and if weâ€™re going to overcome entrenched poverty in America as a whole, we have to pay close attention to what these communities are getting right. To understand why, consider the findings of an important new study.
According to new findings from the Equality of Opportunity Project, an ambitious venture led by the economists Raj Chetty, Nathaniel Hendren, Patrick Kline and Emmanuel Saez, there are dramatic differences in economic outcomes for children raised in different U.S. cities. This shouldnâ€™t be too surprising, as economic conditions vary considerably from region to region and so does the quality of K-12 schools and other institutions that contribute to success later in life. Yet Chetty et al have now put the consequences of these differences in sharp relief.
The team divided the United States into 741 commuting zones, most of which are named after the biggest city in the zone. Though these zones are conceptually similar to the metropolitan and micropolitan areas used by the Census Bureau, theyâ€™re not quite the same. Drawing on anonymized earnings records, the team then sought to track economic outcomes for individuals raised in various commuting zones, including where these individuals wound up in the national income distribution as adults.
While the median household income in one commuting zone might be much higher than it is in another, the study focuses on the national rather than the local income distribution. So if Iâ€™m raised in a relatively poor commuting zone, in which a fairly low income will place me at the median, I might appear to have made a big economic leap if, as an adult, I earn the median income in a relatively rich commuting zone — even though I might subjectively think of myself as having remained in place.
One of the most eye-catching findings from the study is that the average child raised at the 25th percentile in the national income distribution in the Salt Lake City commuting zone wound up at the 46th percentile in the national income distribution as an adult. Again, some of these children may well have moved to commuting zones in other parts of the country. But by and large, people raised in modest circumstances in Salt Lake City have fared well. In contrast, the average child raised at the 25th percentile in Memphis climbed only to the 34th percentile. And in a related vein, while children raised in the bottom fifth of the national income distribution in Salt Lake City had a 12 percent chance of earning an income in the top fifth of the national income distribution, the same is true of only 3 percent of children raised in the bottom fifth in Memphis.
In a widely-read analysis of the Equality of Opportunity Projectâ€™s findings, David Leonhardt, the Washington bureau chief of the New York Times, observed that while commuting zones with the highest mobility rates, like Salt Lake City, Seattle and Pittsburgh, have mobility rates comparable to countries like Denmark and Norway — the international leaders in mobility — commuting zones with the lowest mobility rates, like Memphis and Atlanta, have upward mobility rates that are well below what we see in any other rich country.
Now here is where things get interesting. A number of scholars, including Alan Krueger, who recently served as chairman of President Obamaâ€™s Council of Economic Advisers, have argued that levels of mobility are likely to be low in societies with high levels of inequality. The fact that Denmark and Norway are both highly mobile and highly egalitarian societies lends credence to this thesis. So does common sense. If the gap between incomes at the bottom and the top isnâ€™t particularly great, climbing from the bottom to the top isnâ€™t quite as daunting a prospect as it might be if the gap were much larger.
It is thus noteworthy that Salt Lake City, Seattle and Pittsburgh roughly match levels of mobility in Denmark and Norway despite the fact that these American communities have far higher levels of inequality than their Scandinavian counterparts. The most commonly used measure of inequality is the Gini coefficient, which, to simplify, would assign a zero to a perfectly equal society and a one to a perfectly unequal society. Chetty et al did not calculate Gini coefficients for commuting zones. But when you use Gini coefficients for metropolitan areas as a proxy, something very interesting comes to the surface. While the Gini coefficients for Denmark and Norway are .248 and .250 respectively — much lower than the .467 Gini coefficient for the U.S. — the Gini coefficients for the Salt Lake City, Seattle and Pittsburgh metropolitan areas are .417, .439 and .459 respectively.
This suggests that when children raised in Salt Lake City, Seattle and Pittsburgh are climbing to the top of the income ladder, they are actually climbing much further and faster than their Scandinavian counterparts who pull off the same feat. For whatever reason, the fact that Salt Lake City, Seattle and Pittsburgh include households that have incomes far higher than the median income doesnâ€™t seem to have damaged the lives of children from more modest backgrounds in any appreciable way. Interestingly, the Gini coefficients for the Memphis and Atlanta metropolitan areas are .478 and .452. Inequality levels in the best-performing and worst-performing communities are in roughly the same ballpark.
To foster greater upward mobility, we might look to some of the correlations between upward mobility and other characteristics across all 100 of the largest commuting zones. Scott Winship, a scholar at the Brookings Institution, observes that income growth from 2000 to 2008 and the size of the foreign-born share of the population are strongly associated with high levels of upward mobility. In contrast, the black share of the population, racial segregation, segregation of the poor, the share of families with children headed by single mothers, the share of children born to teen mothers, and the rate of violent crime are all associated with low levels of upward mobility.
The correlation between the black share of the population and low levels of upward mobility has sparked a great deal of discussion. In 2000 black citizens in the low-mobility Memphis and Atlanta commuting zones made up approximately 40 and 26 percent of the population, respectively. The black share of the population is much lower in high-mobility commuting zones like Salt Lake City (1 percent), Seattle (4 percent) and Pittsburgh (7 percent). This is not to suggest that the mobility problem is limited to African-Americans. It is not, as David Leonhardt has carefully explained. Poor whites and poor blacks alike tend to fare badly in communities like Memphis and Atlanta.
It could be that, as Matthew Oâ€™Brien of The Atlantic has argued, anti-black animus shaped local land-use regulations and transportation policies in ways that disadvantaged the disproportionately black, poor populations of Memphis and Atlanta. That is, it could be that heavily black communities invested less in mass transit and experienced more â€śwhite flightâ€ť suburbanization, and sprawl was the inevitable result.
Leonhardt and others, including New York Times columnist Paul Krugman, have identified sprawl as a potential culprit in low mobility levels, which makes intuitive sense. Money that is spent on commuting canâ€™t be accumulated as savings, and time spent on commuting canâ€™t be spent on actually earning money or sharing enriching experiences with oneâ€™s children. Commuting zones with a high share of workers commuting by car tend to have lower levels of upward mobility than other commuting zones. There are, to be sure, notable exceptions to this pattern. The Salt Lake City commuting zone enjoys the shortest mean travel time (22 minutes) and the highest share of workers with a commute of less than 15 minutes (29 percent). Yet the share of workers commuting by car in Salt Lake City is just as high as it is in Atlanta (90 percent) and almost as high as it is in Memphis (94 percent). Nevertheless, it seems reasonable to conclude that improving transit options for poor workers is a good way to improve the economic prospects of their children.
The fairly strong association between violent crime and low levels of upward mobility also merits close attention. New York University sociologist Patrick Sharkey has documented the deleterious impact of local homicides on the cognitive performance of children in high-crime neighborhoods. Salt Lake City had half the violent crime rate of Memphis in 2000, a fact that likely had lasting consequences. One wonders if Salt Lake Cityâ€™s unusually low crime rate helped make up for its greater dependence on the automobile.
Though the Equality of Opportunity Project doesnâ€™t settle the question of how we ought to foster upward mobility, it does point us in a number of interesting directions. While President Obamaâ€™s â€śmiddle-outâ€ť economics focuses on the well-being of middle-income households, we might be better served by â€śbottom-upâ€ť policies aimed at combating entrenched poverty. Crime has fallen for the last twenty years, but it remains far too high in Americaâ€™s high-poverty neighborhoods. Across the country, local land-use regulations restrict economic opportunities for the poor by raising housing costs and lengthening commutes. Tackling these barriers to mobility probably wonâ€™t yield short-term political benefits. But a bottom-up economic strategy has the potential to give poor children a much better start in life, and that is reason enough to pursue it.
PHOTO:Â Harvey, a homeless man, begs for money as he walks between cars along 14th Street in Washington October 20, 2010. REUTERS/Stelios VariasÂ