When It Comes to Poverty, Where You Live Matters

Source: Thinkstock

Source: Thinkstock

In America, we often speak proudly about the idea that the U.S. is a nation where anything is possible. The story of the underdog rising from nothing is a potent piece of American mythology, and we like nothing better than to champion the idea that America is the ultimate “land of opportunity.”

Raj Chetty, a Harvard economist, is challenging that idea. His recent research suggests that the city where you grow up can have a huge impact on your likelihood of escaping poverty as an adult. Indeed, he found that the cities in which poor children grow up can actually help to predict the amount of money they will eventually earn as adults; he has published two different studies of intergenerational mobility which suggest that, in some ways, poverty is a place.

In one study, Chetty and his team studied families living in public housing who had been given housing vouchers which required them to move to a low poverty neighborhood. The children in those families, his research found, eventually grew up to earn much more than their former neighbors in public housing.

Chetty and his researchers found that 50 U.S. counties had the largest impact on kids’ incomes as adults, both positive and negative. At the top of the list, Dupage, Illinois, just ahead of the counties of Fairfax, Virginia and Snohomish, Washington.

At the regional level, Chetty and his team found that “relative mobility is lowest for children who grew up in the Southeast and highest in the Mountain West and rural Midwest.”

But just how much of a difference does it make, economically, if a child grows up in a “city of opportunity” versus the alternative? Well, in the top three ranking cities, poor children were expected to earn around $3,500 to $4,000 more than those children who grew up in average cities. In contrast, the cities at the bottom of the barrel, such as Mecklenburg, North Carolina; Baltimore City, Maryland, and Hillsborough, Florida poor children were expected to grow up to earn about $3,500 to $3,600 less than average. And while a few thousand dollars might not seem like a whole lot to the more affluent among us, for those on or near the poverty line, it often means the difference between survival and subsistence.

Chetty’s research also reflects that the level of inequality within the U.S. is more dramatic than we may have previously imagined it to be, even in lieu of movements such as “the 99%.” Chetty notes that there are certain regions within the U.S. which have relative mobility comparable to the highest mobility countries in the world, such as Canada and Denmark, while others have lower levels of mobility than any other developed country for which data are available.”

Chetty and his team found overall that there “is a substantial variation in intergenerational mobility within the U.S.” He later notes that the U.S. would almost be better described as “a collection of societies, some of which are ‘lands of opportunity’ with high rates of mobility across generations, and others in which few children escape poverty.” In other words, some cities are havens of opportunity and equality, making it possible for poor children to go farther, whereas others have a longer history of poverty, lack of opportunity, and disadvantage. The fact that Baltimore City appears among the top three worst cities to grow up poor seems all the more poignant considering the recent protests against police brutality there.

So, what contributes to a city’s ability to provide opportunity? Chetty says there are a number of factors he and his team have found which tend to characterize cities, like Baltimore, where there is little mobility. One of the biggest? Segregation. “Why is it that places with larger African-American populations have more negative effects on upward mobility?” Chetty asks, per the Washington Post. “We think there’s a set of correlated factors here, where places with larger African-American populations have a lot of other disadvantages. They tend to be much more segregated. They tend to have less investment in things like public schools, and this lack of investment has adverse effects on both African Americans and whites,” Chetty says.

Chetty and his team have found that there are five factors which are the biggest hindrances to mobility. They are, according to his research: residential segregation, income inequality, school quality, social capital, and family structure.

The good news is that Chetty’s research can help policymakers and others involved in the process of city planning and organization understand how to make the poorest, least mobile cities, such as Baltimore, more like those with high levels of mobility, such as Dupage, Illinois, or nearby Fairfax, Virginia. It also provides evidence that something as simple as a move can have a huge impact on a poor child’s livelihood and chance of success, though sadly confirms what so many African Americans already knew, that the cards are largely stacked against their neighborhoods and their communities.

More from Business Cheat Sheet: