Something extraordinary is happening in Salt Lake City, Seattle and Pittsburgh and in the suburbs surrounding them, and if we’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 shouldn’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, they’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 I’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.