Economic Opportunity

The way we measure housing affordability is broken

Posted on by Daniel Hertz

This week, we’re running a three-part series on the flawed way that we measure housing affordability. This post looks at exactly what’s wrong with one of the most common ways we determine what “affordable” means. Tomorrow, we’ll look at an alternative measure, and on Wednesday, we’ll examine the particular challenges of understanding “affordability” for owner-occupied homes.

Given how much time media outlets, policy shops, and community groups have spent talking about America’s affordable housing crisis over the last few years, you might think that we’ve at least settled on a pretty good way to define what housing affordability actually is. After all, how can we talk about solving a problem if we don’t have a reliable way of determining who’s suffering, and where, and why?

Unfortunately, you’d be wrong.

As an illustration, picture yourself as an employee of a local supermarket, making $1,500 a month. You live with a friend in an outlying neighborhood, and your share of rent is $400, plus $300 a month for car expenses. After all that, you have $800 a month left over – which dwindles pretty quickly between child care, groceries, and prescriptions. When you get sick or your car breaks down, you can’t avoid racking up some credit card debt.

The front page of Craigslist for apartments in San Francisco.
The front page of Craigslist for apartments in San Francisco.

 

Across town, a man who works as a VP in marketing makes $8,000 a month. He pays $3,000 in rent for a brand new loft apartment near downtown. Because he can walk to work and takes public transit most other places, he buys a monthly pass for $100 and doesn’t own a car. After those costs, he’s got $4,900 to spend every month, which buys lots of nice meals out and international vacations while leaving room for healthy retirement savings.

You’re having trouble making rent, and the marketing VP can make their payments easily. But according to our most common standard of housing affordability, it’s the VP who’s rent-burdened, and you’re doing fine.

That’s because those standards rely on a simple ratio: if you pay more than 30% of your income in housing costs, your housing is unaffordable. If you don’t, it’s not. And the supermarket worker pays just 27% ($400 of $1,500), while the marketing VP pays 38% ($3,000 of $8,000).

The supermarket/VP story is an extreme example, but it demonstrates several of the fundamental problems with the 30% threshold as a measure of housing affordability.

1. Equity. Most obviously, it doesn’t take into account that, depending on how much money you start with, leaving 70% of your income for all non-housing expenses may be plenty – or not nearly enough. Affluent people have the luxury of deciding whether to spend relatively large proportions of their incomes to buy housing in a better location, or with particular amenities, without sacrificing other necessities like food or clothing. Low-income people generally don’t. In that way, comparisons between people with different earnings can turn out misleading or unfair, as in the example above.

Craigslist apartments in Boston.
Craigslist apartments in Boston.

 

But it can also fail in analyzing the burden of housing costs on people with similar incomes. Not everyone, after all, has the same non-housing obligations: for a healthy, childless twentysomething, a salary of $40,000 might easily cover housing, food, insurance, and other necessities. But someone who has to do much more non-housing spending – because of a chronic medical condition, say, or children with special needs – might struggle on the same income.

2. Other location-based costs. On top of that, there’s increasing recognition that housing choices are closely tied to other costs, which need to be considered part of the package. In other words, the cost of housing is less relevant than the total cost of a location. By far the most important of these other costs is transportation. While housing closer to the center of a metropolitan area is often more expensive, it also requires less driving – and often no driving at all, thanks to public transit – which saves a lot of money. According to Harvard’s Joint Center for Housing Studies, low-income people who manage to spend less than 30% of their income on housing actually end up paying $100 a month more on getting around, which eats into their savings, and sometimes erases them entirely.

Some organizations, like Chicago’s Center for Neighborhood Technology, have tried to take this into account. CNT’s H+T Index shows the total housing and transportation costs for various locations, set against a combined affordability standard of 45% of income. That’s a major step forward – but using a ratio like 45% still has all the other problems of the 30% ratio we’ve already covered.

3. Quality of housing. The 30% threshold can’t tell us anything about what a given household is getting for their money. Few of us would say that affordable housing needs are met by homes that are low in cost but lacking in basic modern amenities like heating or indoor plumbing. While those problems are now relatively rare in major metropolitan areas, many cities have a stock of affordable housing that is predominantly located in neighborhoods with high crime rates, failing schools, few options for fresh food, or other major quality of life issues. Do that housing satisfy our need for affordability?

Craigslist apartments in Memphis.
Craigslist apartments in Memphis.

 

This is an especially important question if we care about housing for its effects on opportunity and mobility. As recent research from Raj Chetty has reinforced, the kind of neighborhood you live in can dramatically change your prospects for living a comfortable middle-class life. It seems odd, in light of those findings, to measure housing access without taking into account whether that access includes communities that offer a shot at economic stability in addition to cheap rent.

In conclusion, the way that we currently measure housing affordability – a simple 30% ratio of cost to income – is simply inadequate to the task. It fails to give us an equitable picture of who is in need and who isn’t; fails to consider the total cost of a location, missing housing-dependent payments, like transportation, that can add a significant burden to low-income households; and fails to consider questions of housing and neighborhood quality that exert significant influences on the life chances of the people who live there.

(Why, then, do we use it? This Bloomberg piece from last year, also pointing out the 30% ratio’s flaws, is probably correct that its durability has to do with simplicity.)

Tomorrow, we’ll look at an alternative way to measure housing affordability that addresses some of these problems.

The Perils of Conflating Gentrification and Displacement: A Longer and Wonkier Critique of Governing’s Gentrification Issue

Posted on by Joe Cortright

It’s telling that Governing calls gentrification the “g-word”—it’s become almost impossible to talk about neighborhood revitalization without objections being raised almost any change amounts to gentrification. While we applaud the attempt to inject some rigor and precision into a debate that has been too often fueled by emotion and anecdote, Governing’s analysis serves only to muddy the waters of this contentious issue.

The Governing team explains that there is no agreed-upon definition for gentrification, and then go on to choose a definition and use it to measure number of neighborhoods that have, and haven’t, gentrified. The report notes that gentrification is not the same thing as displacement; but then repeatedly describes the harm of gentrification as being the displacement of the existing population.

Is Gentrification About Displacement? Or isn’t it?

The underlying problem confronting Governing’s analysis is the confusion of the terms “gentrification” and “displacement”. The Governing team begins by explaining that their definition of gentrification has nothing to do with displacement, but they then go on to detail how “gentrification signifies displacement of the poor, mostly people of color.”

The reason policy analysts and public officials are concerned about gentrification, to the extent it happens, is because it holds the potential to displace the poor from their longtime neighborhoods. As Governing acknowledges, the original definition by British sociologist Ruth Glass was that the middle class “invade” a neighborhood “until all or most of the working class occupiers are displaced,” and the social character of the neighborhood is changed.

Our own work has shown that over four decades, relatively few high-poverty neighborhoods have seen their poverty rates decline to below the national average. It’s also the case that far more of the long-suffering poor move out of high-poverty neighborhoods that stay poor than move away from high-poverty neighborhoods that see a significant reduction in poverty.

A striking omission from the Governing article is any more than a passing mention of the robust academic literature on the extent of displacement in gentrifying neighborhoods. Columbia University’s Lance Freeman reports that outmigration rates for low-skilled black residents of gentrifying neighborhoods are lower than in otherwise similar, non-gentrifying neighborhoods. The University of Colorado’s Terra McKinnish and Kirk White conclude the demographic flows associated with the gentrification of urban neighborhoods are not consistent with displacement or harm to minority households. New York University’s Ingrid Gould Ellen and Katherine O’Reagan write “. . . original residents are much less harmed than is typically assumed. They do not appear to be displaced in the course of change, they experience modest gains in income during the process, and they are more satisfied with their neighborhoods in the wake of the change.”

It’s also discouraging that this entire discussion of poor neighborhoods isn’t placed in a broader context of income segregation of the U.S. population. Income inequality has achieved a new level of visibility in public discussions in the past few years, thanks to the work of Thomas Piketty and others. A number of scholars—Brown University’s John Logan, Rutger’s Paul Jargosky, the University of Missouri’s Todd Swanstrom, and others—have carefully traced out how income inequality has played out in the form of greater spatial separation by income in the nation’s metropolitan areas. The latest research from Stanford’s Sean Reardon and his colleagues shows that income segregation is increasing, driven by the increasing secession of the rich from neighborhoods of lower- and middle-income households. The focus on gentrification—the very limited and small-scale movement of some higher-income and better-educated households into lower-income communities–completely misses the fact that income segregation is being driven by the decisions of higher-income families to increasingly isolate themselves in higher-income enclaves, often in exclusive suburbs and established high-income areas.

One of the ironies of the fear of gentrification is that is often used as excuse to steer limited dollars for assisted housing predominantly or exclusively into low-income neighborhoods, a practice the University of Minnesota’s Myron Orfield has shown to reinforce historical patterns of racial and economic segregation.

Levels vs. Change

In quantitative analysis, we can measure the level of something (whether incomes are high or low, for example). We can also measure the “change” in something—whether incomes are increasing or decreasing.

The limitation of the Governing definition of gentrification is that it is all about change, and it largely ignores levels. Even if education levels or incomes increase in a poor neighborhood, it still may be much less well-educated and lower-income than the average neighborhood in the metropolitan area of which it is a part. This absence of clearly defined thresholds is a perennial omission of gentrification discussions: if one wealthier, whiter, better-educated person moves into a neighborhood, does that constitute gentrification?

As the University of Pennsylvania’s Mark Stern and Susan Seifert note:

Clearly, there is no objective measure of when neighborhood improvement—or, in Jane Jacobs’ striking phrase, ‘unslumming’—becomes gentrification. But if we see neighborhood revitalization as desirable, we cannot afford to label all population change as gentrification. (2007)

There’s something odd about a measurement that purports to examine the extent of “gentrification,” but excludes from its analysis all city neighborhoods with income levels over 40 percent of the metropolitan average. In San Francisco, a city with 196 census tracts, Governing concluded that only 16 were “eligible” to gentrify, and that only 3 tracts did gentrify. Superficially, this creates the impression that gentrification affects only 3 neighborhoods in San Francisco, as opposed to say, 84 neighborhoods in Philadelphia, and 39 neighborhoods in Baltimore. But is it meaningful to conclude that gentrification, income disparities, and displacement are a tenth as widespread in San Francisco as these other cities, simply because San Francisco already had most of its neighborhoods dominated by “the gentry?” Should we put any stock in a measure that says gentrification is more prevalent in Detroit (7 neighborhoods), Cleveland (10) and Fresno (5), than it is in San Francisco (3 neighborhoods)?

The levels of income and education are still very low, and the levels of poverty still very high, in many of the neighborhoods that Governing says have “gentrified.” Can it be said that a neighborhood has gentrified if it has, by comparison to the rest of its metropolitan area, a higher fraction of low-income households than the rest of the metropolitan area? Is this really a helpful way to describe what’s happening in metropolitan areas?

No Apparent Displacement in “Gentrifying” Tracts

The identifiable harm of gentrification is displacement: if Governing has identified tracts that are gentrifying, and if gentrification is a problem, then we should be able to find evidence of displacement. Or, put another way, if neighborhoods are gentrifying and displacement isn’t happening, is it a serious problem?

Let’s compare what happened to gentrifying and non-gentrifying tracts, according to Governing’s definition. Of a total of 4,750 central city census tracts “eligible” to gentrify, 948 gentrified, but 3,802 did not. The tracts that did not gentrify lost 2.4 percent of their population in aggregate. The tracts that did gentrify actually saw their population increase by 6.7%. (This is consistent with the “up or out” pattern we identified in high-poverty tracts nationally: either poverty rates decline and population increases, or high poverty rates persist and population declines).

One recurring theme in overly simplistic gentrification analyses is housing as a zero sum game. If one whiter, wealthier, or better-educated person moves into a neighborhood, that must necessarily mean that one poorer, less-educated person of color must move out. Both Governing’s report and our analysis of high poverty neighborhoods shows that gentrifying or rebounding neighborhoods are actually seeing population increases.

It’s also the case that more poor people live in the Governing’s “gentrified” tracts today than in 2000: the poverty rate in gentrified tracts declined by 0.7%, while the total population increased by 6.5%. Assuming the poverty rate in these tracts exceeded 13 percent in 2000, the population living below the poverty line in these tracts had to have actually increased between 2000 and 2013; hardly evidence, on its face, of widespread displacement.

Another recurring theme in this kind of analysis is the implication that if a neighborhood doesn’t gentrify, that it somehow stays the same. But our analysis of poor neighborhoods showed that places of high poverty aren’t stable; if these neighborhoods don’t see a reduction in poverty, people leave: on average high-poverty neighborhoods that didn’t rebound lost 40 percent of their population over four decades. The same pattern holds for Governing’s “non-gentrifying” neighborhoods—they lost 2.4 percent of their population. This contrasts with the gentrifying places, which were adding population.

Understanding the Nuance of Neighborhood Change

Rather than just a binary classification of neighborhoods as either “gentrified” and “not gentrified,” it’s worth looking at the actual numbers of people involved, poor and non-poor, to get a sense of what’s really happening and what it means.

At City Observatory, we frequently work with tract-level data, and closely follow developments in Portland, where we’re based. We took a close look at Governing’s data for Portland, in part because they concluded that 58% of “eligible” census tracts gentrified in the past decade.

Here are their headline findings for Portland: According to Governing, 62 of 143 census tracts in the City of Portland were “eligible” to gentrify. Of these, 36 gentrified, and 26 did not, according to their calculations.

We gathered the data on population and poverty for all the City of Portland census tracts for 2000 and 2009-13, and categorized them according to the Governing methodology (we noted the classifications as coded on Governing’s map of Portland tracts). We have one more census tract in the City of Portland (in the not eligible category). We ignore this minor difference for the purpose of our analysis. Here’s what the data show about the gentrifying neighborhoods in Portland in the aggregate:

The total population in “gentrifying” neighborhoods actually increased from about 152,000 to about 165,000. This is consistent with our observation that neighborhood change is not a zero sum game. Neighborhoods can gain new residents without necessarily losing existing ones.

The number of poor persons living in “gentrifying” neighborhoods increased. In 2000, there were 25,037 persons in poverty in these neighborhoods; in 2013 there were 34,499 persons living in poverty, about 9,500 more. Even allowing for the increase in poverty rates in the nation and the region over the decade, it’s hard to argue that there was widespread displacement of the poor from these “gentrifying” neighborhoods if they now have 9,500 more poor residents.

As a result, the poverty rate in “gentrifying” neighborhoods in Portland increased between 2000 and 2013 in the aggregate. In 2000 the poverty rate was 16 percent; in 2013, the poverty rate had risen to 20 percent. Even after “gentrifying,” these neighborhoods had a poverty rate that was higher than the regional average of about 13.5 percent.

Meanwhile, the number of non-poor residents also increased by a net of 3,800, from about 127,000 to about 130,000. The “gentrifying” neighborhoods gained about two-and-a half times more net additional poor residents than net additional non-poor residents. Spread over 36 Census Tracts and about 11 years, (2000 through 2011, the mid-point of the 2009-13 five year census pattern) this works out to a net increase of about 10 non-poor persons per “gentrifying” census tract per year—hardly a sweeping change in typical neighborhood demographics.

Poverty, Population, City of Portland, 2000 and 2009-13

Organized by Governing Magazine Gentrification Typology
Governing Category “Gentrified” “Not Gentrified” “Not Eligible” City Total
Tracts 36 26 81 143
Population 2013 165,436 120,742 317,422 603,600
Calculated Persons in Poverty 2013 34,499 27,948 44,845 107,292
Average Tract Poverty Rate 2013 20.0% 22.7% 13.8% 17.0%
Population 2000 152,168 105,583 280,454 538,205
Calculated Persons in Poverty 2000 25,037 15,000 30,242 70,279
Average Tract Poverty Rate 2000 16.8% 14.0% 10.9% 12.9%
Growth in Poverty, 2000-2013 37.8% 86.3% 48.3% 52.7%
NonPoor 2000 127,131 90,583 250,212 467,926
NonPoor 2013 130,937 92,794 272,577 496,308
Percent Change 3.0% 2.4% 8.9% 6.1%
Change in Non_Poor 3,806 2,211 22,365 28,382
Growth in Population 13,268 15,159 36,968 65,395
Poor 9,462 12,948 14,603 37,013
NonPoor 3,806 2,211 22,365 28,382

This is not to say that all of these neighborhoods experienced this same pattern. By our count, 22 of Governing’s 36 gentrifying Portland census tracts experienced increased numbers of persons living in poverty, and 14 saw decreases in their poverty population. Of these 14, nine had decreases of less than five percent since 2000, four had decreases of between five to ten percent, and only one census tract saw a decrease of more than ten percent in its population living in poverty. Arguably, these tracts may be experiencing a measure of displacement. But for reference, it’s worth noting that the between 1970 and 2010, the typical urban high-poverty tract that stayed high-poverty lost about 40 percent of its population. 31 of the 36 “gentrifying” tracts still had poverty rates above the regional average “post-gentrification.”

Defining the Undefinable

After musing about whether gentrification is synonymous with displacement, Governing concludes that we should treat them as two different things, and cites the Centers of Disease Control as agreeing with this view. The authors quote the CDC as saying: “gentrification is merely the transformation of neighborhoods from low value to high value.” The CDC definition, says Governing, has nothing to do with displacement.

It’s worth looking at the CDC’s work here. It turns out that the Centers for Disease Control hasn’t actually done its own research on gentrification. What you’ll find at the CDC website is one wiki-like page of secondary citations, compiled by an unidentified author: http://www.cdc.gov/healthyplaces/healthtopics/gentrification.htm. The CDC is hardly regarded as an expert or arbiter on the subject: Google Scholar reports a total of four citations to this CDC webpage.

It’s important to note that the CDC website—like the rest of the literature on gentrification—clearly flags the harm of gentrification as displacement of the existing population. They use the term “transformation” in their definition. If you read on in the sentences immediately following the definition cited by Governing, this is clear: “This change has the potential to cause displacement of long-time residents and businesses. Displacement happens when long-time or original neighborhood residents move from a gentrified area because of higher rents, mortgages, and property taxes.”

There’s one more wrinkle here. Notice that the CDC definition refers to the transformation of neighborhoods from “low value to high value.” The CDC definition, unlike Governing’s, is about levels, and not just changes. Governing’s definition is not that formerly poor neighborhoods become “high value” neighborhoods, but that they become “higher” value neighborhoods—that their property values increase faster than for the region as a whole. It is entirely possible for a low-value neighborhood to have a higher percentage increase in prices, and still be a low-value neighborhood.

Is there some reason we might want to be cautious about leaning on housing price data from the past decade or so?

A linchpin of the Governing analysis is its reliance on a decade’s worth of housing price data as reported by homeowners to the Census Bureau. They compare the reported value of owner-occupied housing in the 2000 Census, with data from the 2009-13 editions of the American Community Survey, and use this to identify lower income neighborhoods that have experienced higher than average rates of home price appreciation.

As we all recall, that decade represented the period of the biggest volatility in home prices and housing markets in at least eight decades. Home prices were inflated by a giant bubble through the mid-part of the decade, and collapsed in a downturn that wiped out trillions of dollars of household equity, produced millions of foreclosures, and resulted in 17 million more households renting their homes.

Another important development during the past decade was the big increase in gas prices in 2007-08, which persisted until just the past few months. Arguably, higher gas prices had a big impact on the housing market, depressing the price of suburban and exurban homes that were sold to what the real estate community called the “drive-til-you-qualify” crowd.

It’s obvious that this was a decade where a range of market forces were buffeting housing prices. It’s a stretch to assume that gentrification was the sole cause of higher prices in some previously poor neighborhoods.

There’s another deeper technical issue here: Governing’s estimates are based on median home values data that are subject to bias from composition effects. (For a discussion of the volatility and noise that median measures create for housing price inflation estimates, see Jordan Rappaport, “A guide to aggregate house price measures” Kansas City Federal Reserve Bank, 2007.)  The Census Bureau asks for estimates of home values only for owner-occupied homes—not rentals. As long as the number and mix of these homes doesn’t change from one census to another, this isn’t a problem for using the census data to estimate average prices. But the “median” home value is subject to composition effects: if a different number and mix of homes is in the sample in the base year and the final year, the quality of the estimate is compromised. If many formerly owner-occupied low-value homes are foreclosed upon, and converted to rentals, they are no longer included in the median. Because foreclosure was more common among low-value houses this effect drives up the reported median for the remaining higher-value houses. Foreclosure problems are far more common in lower-income neighborhoods than middle- and upper-income neighborhoods. It’s also the case that if new market rate housing gets built in a neighborhood, it is usually at a higher price point than existing housing; this too tends to cause measured median prices to rise, especially in neighborhoods with lots of older, smaller, lower-value homes.

What do we do?

As the Governing team well understands, the metropolitan U.S. is dramatically segregated by income—and income segregation is increasing. An abundance of social science literature shows that concentrated poverty magnifies all of the negative effects of growing up poor (Patrick Sharkey, Jargowsky & Swanstrom). Newly released research on intergenerational mobility shows the devastating effects of concentrated poverty, and that even poor kids that grow up in integrated places have much greater opportunities than their counterparts in neighborhoods of more concentrated poverty (Chetty, Massey and Rothwell).

We live in a nation increasingly segregated by income. Even as racial segregation has waned, income segregation has increased. If we’re serious in our rhetoric about equality of opportunity, we have to do something to tackle the growing spatial class segregation we see in cities.

As Daniel Kay Hertz has observed, critics of gentrification need to say how they expect to achieve a more integrated nation and more integrated cities if they are somehow opposed to some higher-income people moving into what have become lower-income neighborhoods. “The kind of cognitive dissonance that allows someone to decry segregation while they wish to “reverse” the process of integration makes it impossible to articulate a real vision for what a just city might look like. Those who would declare themselves firmly anti-gentrification need to grapple with whether they’re comfortable defending a racial geography born of discrimination and violence.”

Those who raise “gentrification” as an impending threat to American cities owe us a coherent vision of how we can create more just and equitable neighborhoods. Lamenting—and exaggerating—gentrification generates plenty of heat, but precious little light on how cities ought to respond to the twin challenges of income segregation and neighborhood change.

How is economic mobility related to entrepreneurship? (Part 2: Small Business)

Posted on by Joe Cortright

We recently featured a post regarding how venture capital is associated with economic mobility. We know that these are strongly correlated—and that, if we are concerned with the ability of children today to obtain ‘The American Dream,’ we should be concerned with how to increase economic mobility.

To understand more about how cities can increase intergenerational economic mobility, we wanted to take a look at another measure of entrepreneurship: small businesses per capita.

We follow Glaeser, et al, and measure the number of businesses with 20 or fewer employees per 1,000 population in each of the nation’s largest metropolitan areas. As in the previous post, we measure economic mobility as the probability that children born in the bottom quintile rise to the top quintile as adults.

The chart below shows the results: cities with a larger number of small businesses per capita have higher rates of economic mobility. This relationship is positive, but statistically less strong a fit (R-squared: .16) than venture capital.

The data from this post and the previous one suggest that there a positive relationship between entrepreneurship and higher levels of economic mobility, particularly that economic mobility is somewhat correlated with higher numbers of small businesses and more strongly correlated with venture capital.

This analysis is both partial and preliminary. We know from Chetty, et al, that there are other factors (segregation, schools, family structure) that influence economic mobility. A more comprehensive analysis would consider whether or not after controlling for the variation explained by these other factors there was any remaining variation explained by entrepreneurship. Moreover, these relationships are simple correlations, and do not necessarily indicate cause and effect. For example, it could be that economic mobility causes entrepreneurship. Furthermore, our data on small businesses and venture capital are taken from recent years; a more rigorous analysis would look to see whether small business and venture capital levels of two or more decades ago were correlated with economic mobility over the succeeding time period.

Still, taken as a whole, the data suggest that more entrepreneurial places have higher levels of economic mobility. Why this relationship exists and what implications it may have for policy are questions worthy of further research.

To learn more about innovation and entrepreneurship from a metro perspective, go to our cards here. (We also feature information on economic mobility and opportunity, economic segregation, and more here.)

Less in Common

Posted on by Joe Cortright

The essence of cities is bringing people—from all walks of life—together in one place.  Social interaction and a robust mixing of people from different backgrounds, of different ages, with different incomes and interests is part of the secret sauce that enables progress and creates opportunity.  This ease of exchange underpins important aspects of our personal lives, civic effectiveness and economic development.

But over the past several decades, a number of trends–some social, some economic, some political, and others technological–have interacted to dramatically change the ways, the places, and the amounts of interaction between different groups in our society.  By many measures, we now spend less time in social settings, and are less likely to regularly interact with people whose experiences are different from our own.  In our schools, communities, work, shopping and personal activities, we’re increasingly separated from one another.

Our new report, Less in Common, surveys a wide range of measures of how Americans have grown apart from one another over the past several decades.  We’ve intentionally drawn promiscuously from a variety of fields to illustrate the breadth and variety of ways in which this trend seems to be unfolding.

Many of these changes are reflected in the physical landscape of our cities.  In North America, development patterns, particularly the growth of suburbs after World War II, diminished access to an easily shared urban life.  Space and experiences became more private, fueled by suburban expansion, large lots, and the predominance of single-family homes. These development patterns have resulted in Americans having “less in common.”  This phenomenon appears to play out in many different ways:

Distrust among Americans is increasing.  A key marker of social capital that is regularly used in comparing nations and tracking trends over time is the generalized feeling of trust.  The General Social Survey reports that the share of the population that says “most people can be trusted” has fallen from a majority in the 1970s, to about one-third today.

Americans spend significantly less time with their neighbors.  In the 1970s, nearly 30 percent of Americans frequently spent time with neighbors, and only 20 percent had no interactions with them.  Today, those proportions are reversed.

The biggest portion of our leisure time is spent watching television.  TV watching is up to 19 hours per week today compared to about 10 hours in the 1960s.  We spend less time socializing and communicating.

Our recreation is increasingly privatized.  Since 1980, the number of members of private health clubs have quadrupled to more than 50 million.  We used to swim together—prior to World War II, almost all pools were public.  Today, we swim alone in the 5 million or so private swimming pools compared to just a few thousand public ones.

Driving alone has become the norm, with transit reserved for the poor. Today, 85 percent of American commuters travel to work in private automobiles, up from 63 percent in 1960.  Carpooling has fallen by half since 1980, and the share who commute via transit has declined from 12 percent in 1960 to less than 5 percent today.

Economic segregation trends upward as middle-income neighborhoods decline. High-income and low-income Americans have become more geographically separated within metropolitan areas. Between 1970 and 2009 the proportion of families living either in predominantly poor or predominantly affluent neighborhoods doubled from 15 percent to 33 percent.

Many of us live in gated communities. By 1997 it was estimated that there were more than 20,000 gated community developments of 3,000 or more residents. By design, gated communities restrict access and carefully control who is allowed into a community to separate residents from outsiders.

Politically, America sorts itself into like-minded geographies.  Nearly two-thirds (63 percent) of consistent conservatives and about half (49 percent) of consistent liberals say most of their close friends share their political views.

There are some counter-trends to the general pattern of isolation and separation.  Racial segregation, though still high, has declined steadily for decades. New community spaces—like farmer’s markets—have grown rapidly.  Widespread availability of the Internet combined with social media has made it easier and more democratic to connect with others and with all forms of information.

A broadly shared sense of common interest, anchored in a society that promotes social mobility and easy interaction, is a vital underpinning of effective political institutions and the economy.  If we’re going to make progress in tackling a range of our nation’s challenges, and live up to our full potential, we need to reinvigorate the civic commons.

You can also see the findings in the form of an easy-to-share infographic:

Click to see the full infographic.
Click to see the full infographic.

How Governing got it wrong: The problem with confusing gentrification and displacement

Posted on by Joe Cortright

Here’s a quick quiz:  Which of the following statements is true?

a) Gentrification can be harmful because it causes displacement

b) Gentrification is the same thing as displacement

c) Gentrification is a totally different thing than displacement

d) All of the above

If the only studying you did was a reading of the latest series on gentrification from Governing Magazine, you’d have answered “d.” And of course, you’d have a tough time defending your answer.

In attempting to assemble a strong, data-driven definition of this controversial buzzword, a set of feature articles in its February 2015 issue entitled “The ‘G’ word—a special report on gentrification,” Governing succeeds only in making the tortured debate over gentrification even more contentious and unclear.

The most basic flaw of its analysis is coming down squarely on all sides of whether “gentrification” is the same thing as “displacement.”  While the authors claim that these two terms are different things, all of the harms from gentrification that they point to involve displacement: the problem of previous, generally poor residents being forced out of a neighborhood as it changes.

Governing has impressive maps and data—but maps and data are only as sound as the assumptions they are built on. The assumptions here—that gentrification can be accurately measured solely by looking at changes in house prices and education levels in relatively poor city neighborhoods—are flat out wrong, if we are concerned, as Governing tells us we should be, about the displacement of the poor.

There’s precious little evidence that there has been, in the aggregate, any displacement of the poor from the neighborhoods Governing flags as “gentrifying.”  If there were displacement, you’d expect the number of poor people in these neighborhoods to be declining.  In fact, nationally, there are more poor people living in the neighborhoods that they identify as “gentrifying” in 2013 than there were in 2000. Here’s the math*. Governing’s gentrifying neighborhoods have gained poor AND nonpoor residents according to Census data. And even after “gentrifying,” these neighborhoods still have higher poverty rates, on average, than the national average.

Careful academic studies of gentrifying neighborhoods, by Columbia’s Lance Freeman and the University of Colorado’s Terra McKinnish, show that improving neighborhoods actually do a better job of hanging on to previous poor and minority residents than poor neighborhoods that don’t improve. The University of Washington’s Jacob Vigdor has estimated that even when rents go up, existing residents generally attach a value to neighborhood improvements that more than compensates for the higher costs.

This confirms our own analysis of 1,100 urban high-poverty neighborhoods over the past four decades. Only about one in twenty of the census tracts we analyzed saw their poverty rate drop below the national average, and three-quarters stayed very high poverty, but didn’t improve or stay the same: they continued to deteriorate, losing on average 40 percent of their population over 40 years.

In contrast to gentrification, which is rare and seems to be seldom associated with actual displacement, concentrated poverty is real—a growing and devastating challenge that is damaging the futures of millions of Americans, especially children of color. In the past forty years, the number of high-poverty urban neighborhoods has tripled and their population has doubled, to 4 million. Growing up poor is difficult; growing up in neighborhoods where a large fraction of your neighbors are also poor is worse, exposing kids to higher crime and lower quality schools, results in increased mental health issues, fewer job and educational opportunities, and— according to new research by Patrick Sharkey, Raj Chetty and Jonathan Rothwell & Doug Massey— permanently lowers life prospects relative to otherwise similar kids who grow up in mixed income neighborhoods.

Raising a false alarm about gentrification is the policy equivalent of shouting “fire” in a crowded theatre: it promotes mindless panic and does nothing to help us understand and tackle our real urban problems. A magazine that calls itself “Governing” should know the difference between sensationalism and thoughtful analysis.

 

*:  Here’s the math:

Mathematically it’s clear that more poor people live in the Governing’s “gentrified” tracts today than in 2000: according to Governing between 2000 and 2009-13, the poverty rate in gentrified tracts declined by 0.7%, while the total population of these tracts increased by 6.5%.  Assuming the poverty rate in these tracts exceeded 13 percent in 2000, the population living below the poverty line in these tracts had to have actually increased between 2000 and 2013:  hardly evidence, on its face, of widespread displacement.

 

Lost in Place

Posted on by Joe Cortright

Lost in Place: Why the persistence and spread of concentrated poverty–not gentrification–is our biggest urban challenge.

A close look at population change in our poorest urban neighborhoods over the past four decades shows that the concentration of poverty is growing and that gentrification is rare.

While media attention often focuses on those few places that are witnessing a transformation, there are two more potent and less mentioned storylines. The first is the persistence of chronic poverty. Three-quarters of 1970 high-poverty urban neighborhoods in the U.S. are still poor today. The second is the spread of concentrated poverty: three times as many urban neighborhoods have poverty rates exceeding 30 percent as was true in 1970 and the number of poor people living in these neighborhoods has doubled.

The result of these trends is that the poor in the nation’s metropolitan areas are increasingly segregated into neighborhoods of concentrated poverty. In 1970, 28 percent of the urban poor lived in a neighborhood with a poverty rate of 30 percent or more; by 2010, 39 percent of the urban poor lived in such high-poverty neighborhoods. The data, methodology and results of our study are spelled out in our full report, available in PDF format here. The highlights are as follows:

  • High poverty is highly persistent. Of the 1,100 urban census tracts with high poverty in 1970, 750 still had poverty rates double that of the national average four decades later.
  • Though poverty persisted, these high-poverty neighborhoods were not stable—in the aggregate they lost population, with chronic high-poverty neighborhoods losing 40 percent of their population over four decades.
  • Moreover, few high-poverty neighborhoods saw significant reductions in poverty. Between 1970 and 2010, only about 100 of the 1,100 high-poverty urban neighborhoods experienced a reduction in poverty rates to below the national average. These 100 formerly high-poverty census tracts accounted for about five percent of the 1970 high-poverty neighborhood population. In contrast to chronically high-poverty neighborhoods, which lost population, these “rebounding” neighborhoods recorded an aggregate 30 percent increase in population.
  • Urban high-poverty neighborhoods proliferated between 1970 and 2010. The number of high-poverty neighborhoods in the core of metropolitan areas has tripled and their population has doubled in the past four decades. A majority of the increase in high-poverty neighborhoods has been accounted for by “fallen stars”—places that in 1970 had poverty rates below 15 percent, but which today have poverty rates in excess of 30 percent.
  • The growth in the number of poor persons living in “fallen star” neighborhoods dwarfs the decrease in the poverty population in “rebounding” neighborhoods. Since 1970, the poor population in rebounding neighborhoods fell by 67,000 while the number of poor persons living in fallen star neighborhoods increased by 1.25 million.
  • The data presented here suggest an “up or out” dynamic for high-poverty areas. A few places have gentrified, experienced a reduction in poverty, and generated net population growth. But those areas that don’t rebound don’t remain stable: they deteriorate, lose population, and overwhelmingly remain high-poverty neighborhoods. Meanwhile, we are continually creating new high-poverty neighborhoods.

To be poor anywhere is difficult enough, but a growing body of evidence shows the negative effects of poverty are amplified for those who live in high-poverty neighborhoods—places where 30 percent or more of the population live below the poverty line. Quality of life is worse, crime is higher, public services are weaker, and economic opportunity more distant in concentrated poverty neighborhoods. Critically, concentrated poverty figures prominently in the inter-generational transmission of inequality: children growing up in neighborhoods of concentrated poverty have permanently impaired economic prospects.

Our analysis focuses on the 51 largest US metropolitan areas–all those with a population of 1 million or more in the latest Census. The following tables summarize, by metro area, the key variables in our research–the number of high poverty neighborhoods in 1970 and 2010, and the numbers of neighborhoods transitioning between various categories over time.

Listen to the author speak about the report on Think Out Loud, Oregon Public Broadcasting, December 9, 2014:

The Strong Towns Podcast also had the author on to speak about the report.

 

 

For people interested in tracking the performance of a single metropolitan area across all of our measures of concentrated poverty, we offer a Metro-level dashboard. You can select an individual metropolitan area and see how it performs on each of our indicators.

Finally, you can drill down to the level of individual census tracts to examine population change, and the change in the number of persons living in poverty in each metropolitan area covered in our report. (See the full-sized version here)

You can also see the findings in this easy-to-share infographic:

Click for full infographic.
Click for full infographic.

America’s Most Diverse Mixed Income Neighborhoods

Posted on by Joe Cortright

In a nation increasingly divided by race and economic status, where our life prospects are increasingly de ned by the wealth of our zip codes, some American neighborhoods are bucking the trend.

These neighborhoods—which we call America’s most diverse, mixed-income neighborhoods—have high levels of racial, ethnic and income diversity. This report identifies, maps and counts the nation’s most diverse mixed-income neighborhoods. In these neighborhoods, residents are much more likely than the average American to have neighbors from different racial/ethnic groups than themselves, and neighbors with different levels of income. We find that:

  • Nearly 7 million Americans live in neighborhoods with both high levels of racial/ethnic and economic diversity.
  • Roughly half of these neighborhoods are found in three of the nation’s largest, most diverse metropolitan areas: New York, Los Angeles and San Francisco.
  • Most large metropolitan areas have several neighborhoods that are among the nation’s most diverse and mixed income. Forty-four of the nation’s 52 largest metro areas have at least one diverse, mixed-income neighborhood.
  • The racial and ethnic diversity of a metropolitan area sets the context for having diverse, mixed income neighborhoods. Whether metropolitan diversity is reflected in the lived experience in the typical neighborhood depends on how segregated a metropolitan area is by race, ethnicity and class.
  • Some metropolitan areas come much closer to realizing their potential for neighborhood racial/ethnic diversity, given their metropolitan demographic composition.

We identified the nation’s most diverse, mixed income neighborhoods using Census data on the race, ethnicity and household income of neighborhood residents. For each of more than 31,000 urban neighborhoods, we computed a Racial and Ethnic Diversity Index (REDI), which corresponds to the probability that any two randomly selected individuals in a neighborhood would be from different racial/ethnic categories. (Using Census data, we tabulated the number of white, black, Asian, Latino and all other persons in each neighborhood). We used a similar approach to compute an Income Diversity Index (IDI) which measures the variety of household incomes. Neighborhoods that ranked in the top 20 percent of all urban neighborhoods nationally on both of these measures were classified as diverse mixed income neighborhoods.

Which cities have the highest levels of diversity and mixed income?

Nearly all of the nation’s largest cities have at least one neighborhood that meets our definition as being both racially and ethnically diverse and mixed income. Three large cities–New York, Los Angeles and San Francisco account for nearly half such neighborhoods, but some smaller cities also rank high in the fraction of their population living in these diverse, mixed income neighborhoods.

Which cities are performing up to their potential?

Whether a city has many diverse, mixed income neighborhoods depends directly on the demographics of the metropolitan area in which it is located. There is still a wide range of racial and ethnic diversity among metropolitan areas. The following chart shows the relationship between a metropolitan area’s overall racial and ethnic diversity (shown on the horizontal axis) and the percentage of that region’s population that lives in diverse, mixed income neighborhoods. More diverse metros generally have a larger share of their population living in diverse, mixed income neighborhoods. The regression line shows the typical relationship between metro diversity and the share of population living in diverse, mixed income neighborhoods. Cities above that line are performing better, on average, than one would expect based on their diversity; cities below that line are performing less well.

Some cities do a better job of realizing their diversity at a neighborhood level, than others. For each large metropolitan area we’ve computed the racial and ethnic diversity of the median neighborhood–reflecting lived experience of the typical resident. We’ve then compared that with the racial and ethnic diversity of the metropolitan area to see how closely the experience of the typical neighborhood resident comes to matching the diversity of the metropolitan area in which they live. Cities at the top of the list have neighborhood diversity that closely resembles metro diversity; those at the bottom are much more segregated, and don’t experience at the neighborhood level much of the diversity of their region.

Where are the most diverse, mixed income neighborhoods?

We’ve mapped the locations of the most racially and ethnically diverse and most mixed income neighborhoods in each of the nation’s 52 largest metropolitan areas. The map for San Francisco–one of the higher ranking metro areas–shows strong concentrations of diverse, mixed income neighborhoods in the City of San Francisco and the East Bay.

Detailed maps of the location of diverse, mixed income neighborhoods for each of the nation’s 52 largest metropolitan areas are available here. These on-line maps enable you to see the patterns of diversity in each metro area, and drill-down to the census tract level to inspect data for individual neighborhoods.

Why integration matters

A growing body of social science research confirms the importance of diversity to economic success. Greater socioeconomic mixing is facilitated in neighborhoods that re ect America’s racial and ethnic diversity, and which offer housing that is affordable to people with a range of incomes. In a series of studies led by Stanford’s Raj Chetty and his colleagues at the Equality of Opportunity Project, racial and economic segregation have been shown to reduce intergenerational economic mobility (the probability that children of low income families will, as adults, earn higher incomes than their parents). A recent post at City Observatory presents a synopsis of the literature on this subject, with citations to key works.

For a long time, we’ve known that neighborhoods of concentrated poverty are toxic to the life prospects of children who grow up there. Rothwell and Massey have shown that your neighbors’ educational attainment is nearly half as large as your parents’ educational attainment in shaping your life prospects. Living in a neighborhood with greater diversity and a mix of incomes generally means that families enjoy better-resourced public services and civic assets (including schools, parks and libraries) and develop stronger, more diverse social networks. Diverse, mixed-income neighborhoods are a platform for helping kids from lower-income families to escape poverty and realize the American dream.

Want to know more?

We’ve laid out our data, methodology and more detailed findings on our analyses of racial and ethnic diversity, and of income diversity in our technical report “Identifying America’s Most Diverse Inclusive Neighborhoods.”

How is economic mobility related to entrepreneurship? (Part 1: Venture Capital)

Posted on by Joe Cortright

The work of Raj Chetty and his colleagues at the Equality of Opportunity project has spurred intense interest in the extent of economic mobility, measured by the likelihood that children born to low-income parents achieve higher economic status when they are adults. Their work shows a remarkable degree of geographic variation in intergenerational economic mobility. In many communities, the chances of measurably improving one’s economic prospects are dramatically lower than in others. The variations aren’t random: their analysis finds that intergenerational economic mobility is correlated with a number of community characteristics, such as residential segregation, income inequality, school quality, social capital, and family structure.

In theory, we believe that entrepreneurship is a key mechanism for promoting economic mobility. Entrepreneurs can create new businesses that give themselves—and their employees—the chance to improve their economic position. We already know that entrepreneurship is one of the critically important factors in stimulating metropolitan economic growth. Job growth is strongly correlated with an abundance of small firms. Across metropolitan areas, metro areas with more small firms relative to the size of their population see faster employment growth (Glaeser, Kerr, & Ponzetto, 2010).

Fast growing, entrepreneurial firms may be particularly important for providing opportunities for upward mobility because they tend to hire more younger workers than other bigger firms (Ouimet & Zarutskie, 2013). Having a large number of young, small, entrepreneurial firms may create more opportunities for young workers from all economic strata to progress through the economic spectrum.

So, what is the relationship between entrepreneurial activity and economic mobility? One way we look at this is to examine venture capital per capita. (For this analysis, like most others we produce, we focus on the nation’s 51 largest metropolitan areas—those with populations larger than 1 million in 2012.)

Venture capital investments are a key indicator of entrepreneurial activity. We tabulate data from the National Venture Capital Association on the dollar value of venture capital in 2011 divided by the population of the metropolitan area. Because of the very large disparities in venture capital per capita among metropolitan, we took the log of this variable.

We compare the venture capital per capita in each metropolitan area with the level of intergenerational mobility by metropolitan area. We use Chetty, et al’s measure of intergenerational economic mobility: the probability that children born to families in the lowest income quintile had incomes as adults that put them in the highest income quintile. Among the nation’s largest metropolitan areas the probability of moving from the lowest quintile to the highest varied by a factor of about three: a four percent chance in the least economically mobile areas to a nearly 12 percent chance in the most economically mobile areas.

The chart below shows the relationship between venture capital and economic mobility for these large metropolitan areas. The data show a positive relationship between venture capital and economic mobility: cities with higher levels of venture capital have higher levels of economic mobility. (The R2 of .31 suggests that this is a statistically significant relationship.)

This strong positive relationship is not something we can immediately claim as a causal link—however, it has implications for further study. It also raises interesting questions: if cities attract more venture capital, will they be able to attract more young talent? And how will that impact economic mobility and inequality within the city?

In a future post we will examine the link between the number of small businesses in a metro and economic mobility, and conclude this segment. (To read more on economic opportunity, go here, and to read more about innovation and entrepreneurship, see our work here.)

How segregation limits opportunity

Posted on by Joe Cortright

The more segregated an metro area is, the worse the economic prospects of the poor and people of color

Our City Observatory report, Lost in Place, closely tracks the growth of concentrated poverty in the nation’s cities; this is particularly important because of the widespread evidence of the permanent damage high-poverty neighborhoods do to children of poor families.

Two recent studies shed additional light on the importance of economic and racial integration to the life chances of students from low income families and children of color.

Writing in the journal Social Problems, Lincoln Quillan explores the question “Does Segregation Create Winners and Losers?” Quillian uses data from the Panel Study of Income Dynamics, a federal survey program that gathers longitudinal data on a representative group of Americans over several decades.

Quillian shows that increases in segregation at the metropolitan level are associated with lower rates of high school completion for poor and black students. Poor and black students that live in more segregated metropolitan areas are less likely to graduate from high school after controlling for other observable factors that influence individual success, such as the level of their parents’ education. Significantly, higher rates of segregation do not appear to have any statistically significant effects on the high school completion rates of whites or the non-poor. Taken together, these findings suggest that increasing racial and economic integration improves the educational outcomes for black and poor students without any negative effect on the educational outcomes of white and non-poor students.

This is important. If increased economic integration does not affect educational prospects for higher-income students, then the myth that having more integrated neighborhoods will “drag down” the potential success for the current residents is just that: a false myth. The implication of this research for housing policy is particularly salient.

In another article, published in the Annals of the American Academy of Political and Social Science, Sean Reardon, Lindsay Fox, and Joseph Townsend look at the trends in income segregation. Using data from the American Community Survey, they look at the trends behind the growing overall levels of income segregation in most metropolitan areas.

Their analysis finds that aggregate household income segregation has increased mostly because of the increasing isolation of the highest income households from low- and moderate-income households. This is what Robert Reich famously labeled “the secession of the successful.” Higher-income households are more likely to live in neighborhoods with other high-income households than was true two three decades ago. The authors also estimate changes in income segregation for each of the 50 largest metropolitan areas in the nation. They point out wide variations across the country.

Differences in income levels and residential segregation patterns among metropolitan areas produce very different experiences for the urban poor in different metros. In some higher income metro areas with less segregation, the poorest residents live in neighborhoods with noticeably higher incomes than the poorest residents of poorer, more segregated metros. For example, those in the tenth percentile of household income in Washington D.C. and Minneapolis live in neighborhoods that have average household incomes equal to the levels experienced by the median-income households in Atlanta and Los Angeles. You can see these differences in the figure below, excerpted from the paper:

Reardon Figure 4

This plots household income against neighborhood income. Most metros are similar, with the typical low-income family living in a neighborhood with a median income of $45K. Washington and Minneapolis have higher average incomes and are more economically integrated than other large metropolitan areas. Families in the lowest 25th percentile in these cities live in neighborhoods with median incomes of $60,000 (Minneapolis) and $70,000 (Washington). In the typical large metro area, you have to have an income of $75,000 (or more) to have such well-to-do neighbors.

Finally, this paper also presents major findings on racial integration and associated effects on economic integration. Black and Hispanic households tend to be highly concentrated into black and Hispanic neighborhoods, which has implications for poverty and economic mobility that we outline in our report here and blog post here. Most importantly, households with the same yearly income live in very different neighborhoods depending on their race:

“Black middle-class households (with incomes of roughly $55-$60,000), for example, typically live in neighborhoods with median incomes similar to those of very poor white households (those with incomes of roughly $12,000). For Hispanic households the disparity is only slightly smaller. Moreover, even high-income black and Hispanic households do not achieve neighborhood income parity with similar-income white households.”

While the growing gap between rich and poor is capturing greater policy attention, these two studies remind us that the spatial patterns of integration within metropolitan areas have a big impact on the quality of life and life prospects, especially of low-income households. It also indicates that how we build and inhabit our cities influences educational attainment and economic success, have an important role in ameliorating the effects of income inequality, which can have long-lasting impacts on city-wide educational attainment and economic success.

A hat tip to City Observatory’s friend Bridget Marquis for flagging these articles.

New Findings on Economic Opportunity (that you should know)

Posted on by Joe Cortright

Our recent report, Lost in Place, closely tracks the growth of concentrated poverty in the nation’s cities; this is particularly important because of the widespread evidence of the permanent damage high-poverty neighborhoods do to children of poor families.

Two new studies shed additional light on the importance of economic and racial integration to the life chances of poor students and children of color.

Writing in the journal Social Problems, Lincoln Quillan explores the question “Does Segregation Create Winners and Losers?”

Quillian uses data from the Panel Study of Income Dynamics, a federal survey program that gathers longitudinal data on a representative group of Americans over several decades.

Quillian shows that increases in segregation at the metropolitan level are associated with lower rates of high school completion for poor and black students. Poor and black students that live in more segregated metropolitan areas are less likely to graduate from high school after controlling for other observable factors that influence individual success, such as the level of their parents’ education. Significantly, higher rates of segregation do not appear to have any statistically significant effects on the high school completion rates of whites or the non-poor. Taken together, these findings suggest that increasing racial and economic integration improves the educational outcomes for black and poor students without any negative effect on the educational outcomes of white and non-poor students.

This is important. If increased economic integration does not affect educational prospects for higher-income students, then the myth that having more integrated neighborhoods will “drag down” the potential success for the current residents is just that: a false myth. The implication of this research for housing policy is particularly salient.

In another article, due for publication in a forthcoming issue of the Annals of the American Academy of Political and Social Science, Sean Reardon, Lindsay Fox, and Joseph Townsend look at the trends in income segregation. Using data from the American Community Survey, they look at the trends behind the growing overall levels of income segregation in most metropolitan areas.

Their analysis finds that aggregate household income segregation has increased mostly because of the increasing isolation of the highest income households from low- and moderate-income households. Higher-income households are more likely to live in neighborhoods with other high-income households than was true two three decades ago. The authors also estimate changes in income segregation for each of the 50 largest metropolitan areas in the nation. They point out wide variations across the country.

Differences in income levels and residential segregation patterns among metropolitan areas produce very different experiences for the urban poor in different metros. In some higher income metro areas with less segregation, the poorest residents live in neighborhoods with noticeably higher incomes than the poorest residents of poorer, more segregated metros. For example, those in the tenth percentile of household income in Washington D.C. and Minneapolis live in neighborhoods that have average household incomes equal to the levels experienced by the median-income households in Atlanta and Los Angeles. You can see these differences in the figure below, excerpted from the paper:

Reardon Figure 4

This plots household income against neighborhood income. Most metros are similar, with the typical low-income family living in a neighborhood with a median income of $45K. Washington and Minneapolis have higher average incomes and are more economically integrated than other large metropolitan areas. Families in the lowest 25th percentile in these cities live in neighborhoods with median incomes of $60,000 (Minneapolis) and $70,000 (Washington). In the typical large metro area, you have to have an income of $75,000 (or more) to have such well-to-do neighbors.

Finally, this paper also presents major findings on racial integration and associated effects on economic integration. Black and Hispanic households tend to be highly concentrated into black and hispanic neighborhoods, which has implications for poverty and economic mobility that we outline in our report here and blog post here. Most importantly, households with the same yearly income live in very different neighborhoods depending on their race: “Black middle-class households (with incomes of roughly $55-$60,000), for example, typically live in neighborhoods with median incomes similar to those of very poor white households (those with incomes of roughly $12,000). For Hispanic households the disparity is only slightly smaller. Moreover, even high-income black and Hispanic households do not achieve neighborhood income parity with similar-income white households.”

While the growing gap between rich and poor is capturing greater policy attention, these two studies remind us that the spatial patterns of integration within metropolitan areas have a big impact on the quality of life and life prospects, especially of low-income households. It also indicates that how we build and inhabit our cities influences educational attainment and economic success, have an important role in ameliorating the effects of income inequality, which can have long-lasting impacts on city-wide educational attainment and economic success.

A hat tip to City Observatory’s friend Bridget Marquis for flagging these articles.

Why integration matters

Posted on by Joe Cortright

Socioeconomic mixing, in neighborhoods that are diverse in race, ethnicity and income, benefits everyone

To some extent, we take for granted that integration and equal opportunity should be valued for their own sake. But its worth noting that achieving greater integration along both racial/ethnic and income dimensions is important to achieving more widespread prosperity and combatting poverty.

A growing body of sociological and economic research have demonstrated the high costs associated with racial and income segregation. While a comprehensive review of this literature is beyond the scope of this paper, we highlight here some of the key research findings that bear on the economic consequences of neighborhood diversity. Neighborhoods of concentrated disadvantage are not simply places where many households suffer from their own individual problems. The segregation of poverty (or a marginalized racial group) creates its own additional, collective burden on residents of these communities.

Galster and Sharkey undertake an extensive literature review of data on neighborhood effects of poverty. They find that segregation is associated with lower cognitive development and weaker academic performance, greater likelihood of teen pregnancy and risky behaviors, reduced physical and mental health, lower incomes and lower probability of employment, greater likelihood of being affected by or engaged in crime. Looking at more than 100 studies which they regard as quantitatively rigorous they conclude:

. . . the findings on the number of (methodologically rigorous) studies that have found substantial, statistically significant effects of spatial context (for at least some set of individuals) and those that have not, by outcome domain. The tally makes it clear that the preponderance of evidence in every outcome domain is that multiple aspects of spatial context exert important causal influences over a wide range of outcomes related to socioeconomic opportunity, though which aspects are most powerful depends on the outcome and the gender and ethnicity of the individuals in question.
(Galster & Sharkey, 2017)

Part of this burden is evident in day-to-day quality of life issues, such as greater exposure to crime. Studies of the “Moving to Opportunity” program, in which families were given assistance to move from low-income to middle-income neighborhoods, showed a marked improvement in self-reported well-being. Moving to a neighborhood whose poverty rate was 13 percentage points lower was associated with an increase in self-reported quality of life equivalent to an increase of $13,000 in household income (Ludwig et al., 2012). But perhaps the most serious effects of concentrated disadvantage are the ways in which it acts to reproduce inequality and quash economic opportunity and mobility—the very promise of the American dream.

High-poverty neighborhoods put their residents at a significant and immediate economic disadvantage. They typically have fewer local jobs than other neighborhoods, and often are distant from, or poorly connected to, other major job centers. These communities also often lack social networks that allow residents to find job openings (Bayer, Ross, & Topa, 2004).

For these and other reasons, people who grow up in high-poverty neighborhoods, on average, have worse economic outcomes than people who grow up in other kinds of neighborhoods, even if their family backgrounds are identical. The Equality of Opportunity Project has shown that inter-generational income mobility is significantly higher in metropolitan areas with lower levels of income segregation(Chetty, Hendren, Kline, & Saez, 2014)). The effect is so strong that, for children whose families move from high-segregation to low-segregation metropolitan areas, each additional year spent in the high-segregation region before the move is associated with less income as an adult.

Chetty and Hendren find that across metropolitan areas both income and racial ethnic segregation have a negative effect on children’s income as adults (Chetty & Hendren, 2016) (Chetty & Hendren, 2016)

“. . . our analysis strongly supports the hypothesis that growing up in a more segregated area – that is, in a neighborhood with concentrated poverty – is detrimental for disadvantaged youth. “

But they go on to say that it’s not because of their parents access to jobs, but because of the children’s exposure to a different set of peers.

“Areas with less concentrated poverty, less income inequality, better schools, a larger share of two-parent families, and lower crime rates tend to produce better outcomes for children in poor families. Boys’ outcomes vary more across areas than girls’ outcomes, and boys have especially negative outcomes in highly segregated areas. One-fifth of the black-white income gap can be explained by differences in the counties in which black and white children grow up.”

Other studies have found similar effects. For example, black children who grow up in high-poverty neighborhoods that transition to low levels of poverty have incomes that are 30 to 40 percent higher than black children with similar backgrounds who grow up in neighborhoods that remain at high levels of poverty (Sharkey, 2013) Observing the results of a natural experiment that relocated families from public housing in Chicago, Eric Chyn found that children who moved even relatively short distances to neighborhoods with somewhat lower poverty rates also experienced noticeable gains in earnings (Chyn, 2016)

Another analysis suggests that the educational level of ones neighbors has an effect on a child’s economic future nearly as large as that of the educational level of a child’s own parents. The effect of neighborhood educational level on children’s future earnings have been estimated to be two-thirds as powerful as the influence of the children’s own parental educaton (Rothwell & Massey, 2014).

The effects that are observed at the neighborhood level appear to compound to produce the variations in economic results we observe across metropolitan areas. Quillian shows that increases in segregation at the metropolitan level are associated with lower rates of high school completion for poor and black students. (Quillian, 2014) Quillian uses data from the Panel Study of Income Dynamics, a federal survey program that gathers longitudinal data on a representative group of Americans over several decades. Poor and black students that live in more segregated metropolitan areas are less likely to graduate from high school after controlling for other observable factors that influence individual success, such as the level of their parents’ education. Significantly, higher rates of segregation do not appear to have any statistically significant effects on the high school completion rates of whites or the non-poor. Taken together, these findings suggest that increasing racial and economic integration improves the educational outcomes for black and poor students without any negative effect on the educational outcomes of white and non-poor students.

A recent study prepared by the Urban Institute and the Metropolitan Policy Center estimated the cumulative economic and social costs associated with segregation in that metropolitan area. They found that the annual estimated cost of segregation in Chicago was more than $4 billion annually in lost income, and meant that fewer residents achieved a college education, while more were victims of crime, including homicide. (Acs, Pendall, Treskon, & Khare, 2017)

Taken together, the weight of social science evidence shows that racial/ethnic and economic segregation have profound consequences for individuals, for neighborhoods and entire cities. Much of the persistence and severity of poverty is due to the continued segregation. More integrated neighborhoods and more integrated cities enjoy better economic results, and produce better lifetime opportunities for their children. These findings point up the critical importance of the role of the nation’s racially and ethnically diverse, mixed income neighborhoods.

References

Acs, G., Pendall, R., Treskon, M., & Khare, A. (2017). The Cost of Segregation: National Trends and the Case of Chicago, 1990–2010. Washington, DC: Urban Institute. Retrieved from http://www. urban. org/research/publication/cost-segregation.

Bayer, P., Ross, S. L., & Topa, G. (2004). Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes (Working paper No. 2004–07). University of Connecticut, Department of Economics. Retrieved from https://ideas.repec.org/p/uct/uconnp/2004-07.html

Chetty, R., & Hendren, N. (2016). The impacts of neighborhoods on intergenerational mobility ii: County-level estimates. National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w23002

Chetty, R., Hendren, N., Kline, P., & Saez, E. (2014). Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States. National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w19843

Chyn, E. (2016). Moved to opportunity: The long-run effect of public housing demolition on labor market outcomes of children. Unpublished Paper. University of Michigan, Ann Arbor.

Galster, G., & Sharkey, P. (2017). Spatial Foundations of Inequality: A Conceptual Model and Empirical Overview. RSF, 3(2), 1–33. https://doi.org/10.7758/RSF.2017.3.2.01

Ludwig, J., Duncan, G. J., Gennetian, L. A., Katz, L. F., Kessler, R. C., Kling, J. R., & Sanbonmatsu, L. (2012). Neighborhood effects on the long-term well-being of low-income adults. Science, 337(6101), 1505–1510.

Quillian, L. (2014). Does Segregation Create Winners and Losers? Residential Segregation and Inequality in Educational Attainment. Social Problems, 61(3), 402–426.

Rothwell, J. T., & Massey, D. S. (2014). Geographic Effects on Intergenerational Income Mobility. Economic Geography, n/a-n/a. https://doi.org/10.1111/ecge.12072

Sharkey, P. (2013). Stuck in place: Urban neighborhoods and the end of progress toward racial equality. University of Chicago Press. Retrieved from http://books.google.com/books?hl=en&lr=&id=R-b_NlPJeuUC&oi=fnd&pg=PR5&dq=patrick+sharkey+stuck+in+place&ots=xJkeq39Kje&sig=0lmKDBM6OxHGMNk0jBga4EtDFqM

 

Tracking Neighborhood Change: How we made “Lost In Place”

Posted on by Dillon Mahmoudi

In this post, we’ll go over the data and mapping steps that were used to create our Lost In Place report on the concentration of poverty and the interactive web map. This post is one of several commentary posts that accompany the report, including an examination of how poverty has deepened.

Data for our report is provided at the Census Tract geography for US Metropolitan Statistical Areas (MSAs) with a 2010 population of over 1 million people — 51 in total. Our online map and report are based off two reported data points across five Census years: population and poverty levels in 1970, 1980, 1990, 2000 and 2010. Unfortunately for data analysis, Census Tract boundaries changed each census year between 1970 and 2010 as the geography of people changed. Fortunately, John Logan of Brown University and his colleagues released the Longitudinal Tract Database (LTDB) and have estimated tract-level Census counts from historical Census data from 1970 through 2010 using Census 2010 tract boundaries.

Two additional steps were necessary: we needed to determine which Census Tracts were part of our MSAs of interest, and in order to create maps and determine which tracts are within 10 miles of each MSAs central business district (CBD), we need to merge the Census tract data with their corresponding Census tract polygons. First, each 2010 Census Tract number is composed of a 2-digit identifier for the state, a 3-digit county identifier, followed by a 6-digit tract identifier. For example, Census Tract number 41051010600 can be decomposed State 41 (Oregon), County 051 (Multnomah) and Tract 010600. Using the Census Metropolitan Statistical Area Definition Files, we see that any Census Tract that starts with 41051 (often referred to as the FIPS State-County) is within the MSA 38900 (Portland-Vancouver-Hillsboro, OR-WA). Using this information, we filtered the our tracts list to only those within our MSAs of interest.

Second, using only this filtered set of Census Tracts, we matched the Census Tract numbers to the Census Tract numbers of Census 2010 tract shapefiles. Using a list of CBDs for each of the metro areas, we calculated the distance from the CBD to the nearest point of each MSAs Census Tract polygon. Once this spatial relationship is calculated, we could calculate totals for core MSA and the MSA as a total.

Using the existing literature, we developed the typology of tracts in poverty featured in the report. We used QGIS to create GEOJSON-based shapefiles with the geographic data in them. This allows us to host the files on github, making them available for download. But first, we needed to shrink the size of the shapefiles in order to serve an entire metro areas tract files quickly. We did this by simplifying the geography using rgeos in R. Additionally, by having a shapefile for each metropolitan area, we can quickly and dynamically load shapefiles for each metro area. To create the interactive maps for each metro, we used a combination of Mapbox.js and the Stamen Design basemaps.

We hope that both the data and the analysis that we develop at City Observatory help advance the understanding of cities.  Please feel free to contact us with your questions and comments.

Our dataset can be downloaded here.

How Poverty Has Deepened (part 2)

Posted on by CityObservatory Guest

Recently, we discussed the growth in the number of urban high-poverty neighborhoods, which we illustrated by examining the distribution of poverty rates among census tracts. This analysis showed that high poverty neighborhoods are becoming more common in urban areas. Today we will use this distribution to discuss what few of us have directly experienced: extremely concentrated poverty. There is a small but growing segment of the population that lives in significantly differently conditions than the rest of the population; this group is one that sees extreme hardship and the highest rates of poverty nationally.

As you can see, while next to no one lived in urban census tracts had an 80% or higher poverty rate in 1970, over 72,000 people lived in neighborhoods with an 80% or higher poverty rate 40 years later. 20,000 lived in tracts with a 90% or higher poverty rate. It is extremely difficult for many to imagine living in a neighborhood where 1 in 2 people live in poverty (notice that this number tripled 1970 to 2010), but to live in a place where almost no one lives on more than $22,050 a year- for a family of 4- has profound implications for those residents.

While 72,000 is not a lot in the scope of the millions of residents of urban neighborhoods nationwide, it is still deeply concerning to have that many live in pockets of such highly concentrated poverty. To understand more about what 80% poverty means, I examined a census tract in Cleveland with an 83% poverty rate. It is census tract # 39035109801, and it is part of the Central neighborhood in Cleveland. In 1970, it had over a 50% poverty rate. Google Earth shows this picture of it:

cleveland google maps

It is a mix of empty land, industrial warehouses, and low-income housing units. The 2010 Census data provides the following demographic breakdown:

These are extremely atypical demographics. For example, the national median household income was $50,046 in 2010, compared to $7,654 in this neighborhood. Even with pictures, numbers, and demographic profiles, it is very difficult for most people to understand how difficult it can be to live in a place with this level of poverty.

We know that high poverty rates– even at the levels of 30% instead of 50% or higher- can have long-lasting implications for residents. Specifically,

“Concentrated poverty is associated with negative social effects (higher crime, worse mental and physical health), and lower economic prospects (both for current residents now and their children over their lifetimes). Concentrated poverty tends to be self-reinforcing: low-income communities have fewer fiscal resources (despite greater needs), producing low-quality public services. A lack of strong social networks undercuts the political efficacy of these citizens. There are a number of studies that review the extensive literature on the negative effects of concentrated poverty (Jargowsky & Swanstrom, 2009; Sard & Rice, 2014; Kneebone, Nadeau, & Berube, 2011).” –Lost in Place: Why the persistence and spread of concentrated poverty—not gentrification—is our biggest urban challenge.

Most troubling is the direct impact on children in poverty. 26% of children are living in poverty, almost double the national rate (14.5%). In the neighborhood I just highlighted, 897 children 14 and younger—or 45% of the population according to the census—grew up in a place where if they were not impoverished, almost all of their neighbors were. The effects of a poor neighborhood, including sub-standard public services, worse schools, a lack of social ties necessary to get better jobs, and the many other well-noted direct social and economic impacts of living in concentrated poverty all mean that a growing number young children are growing up with less of a chance than they would have had 40 years ago.

More unfortunately, this also means that demographically, the growing concentration of poverty and income segregation has resulted in lower opportunities for people of color. Poverty and lowered income mobility disproportionately affects children of color; 71% of black infants and toddlers are low income, as are 67% of Hispanic infants and toddlers. (The Central neighborhood above is an even more extreme example of this disproportionality.) New evidence by Reardon, Fox and Townsend (2014) examines economic integration and racial segregation, noting that:

“The racial disparities in neighborhood income distributions are particularly troubling because these are differences that are present even among households with the same incomes. If long-term exposure to neighborhood poverty negatively affects child development, educational success, mental health, and adult earnings (and a growing body of research suggests it does, as noted above), then these large racial disparities in exposure to poverty may have long-term consequences. They mean that black and Hispanic children and families are doubly disadvantaged—both economically and contextually—relative to white and Asian families.”

Given the self-reinforcing nature of poverty and its effects, this is a very concerning trend for black and Hispanic communities. The more common experience of urban poverty, and its concentration and deepening, doesn’t add up to a promising future- for any of us.

(At CityObservatory, we will continue to explore themes of poverty, economic integration, and policy solutions aimed at alleviating these issues. We also hope to illuminate growing evidence that increasing the welfare of low-income citizens has positive implications for middle and higher-income citizens. To read more about income segregation and economic opportunity, go here. For some links to articles we find particularly relevant go here and here.)

City Report: Lost in Place

Posted on by Joe Cortright

Here’s a summary of our latest CityReport: Lost in Place: Why the persistence and spread of concentrated poverty–not gentrification–is our biggest urban challenge.

Lost in Place traces the history of high poverty neighborhoods in large US cities, and constructs a new view of the process of neighborhood change.  This article summarizes some of our key findings.  A complete guide to our report, including a PDF of the report narrative, sortable tables of metro area data and links to our neighborhood level maps are available here.

We were drawn to examine this question because of the concerns that are frequently raised suggesting that efforts to promote urban revitalization have the unintended negative consequence of making life worse for the urban poor. The argument is made that improving a neighborhood simply results in one population (wealthier, whiter) moving in and the existing residents (poorer persons of color) moving out, with the result that the poor are worse off than they were had no revitalization occurred. There are some well-known examples of places that are now very high income–like Chelsea in Manhattan–which were once poor neighborhoods.

But the question is seldom asked: How representative are these instances? And how prominently do they figure shaping the overall pattern and prevalence of urban poverty?

The term gentrification itself is fraught with discord. It is widely used and seldom precisely defined. In this study, we’ve set out to shed some light on the question by focusing on a single index of neighborhood well-being: the poverty rate. Despite its flaws, the poverty rate is a good marker of a neighborhood’s relative economic status over time. Moreover, critiques of gentrification flag its harm to the poor, so logically, we should find the most dramatic effects of gentrification in high poverty neighborhoods.

There are very good reasons we ought to be concerned about the plight of those living in high poverty neighborhoods. A growing body of social science research confirms that concentrated poverty magnifies all of the pathologies associated with poverty. Most troubling, new research shows that these effects make a major contribution to the intergenerational transmission of poverty: children growing up in neighborhoods of high poverty have permanently impaired life chances compared to otherwise identical children growing up in neighborhoods with low poverty.

Our data show that while striking when it happens, instances of gentrification of previously high-poverty neighborhoods are quite rare. Only about 5 percent of the poor living in urban high-poverty neighborhoods in 1970 would have found that their neighborhood saw its poverty rate decline to less than the national average four decades later.

Three-quarters of high-poverty neighborhoods were still places of high poverty four decades later. But they were far from stable; on average these chronically-poor neighborhoods lost 40 percent of their population over four decades. High-poverty neighborhoods are not stable or sustainable; they are in a steady process of decay. It’s an illusion to suggest that in the absence of gentrification, a poor neighborhood will remain the same.

Infographic

If we’re concerned about the poor and about concentrated poverty, our attention should be riveted to a much larger and more ominous trend: the growth of new neighborhoods of high poverty. Between 1970 and 2010, the number of urban neighborhoods with poverty rates exceeding 30 percent nearly tripled, to 3,100, and the number of poor persons living in these neighborhoods doubled from 2 million to 4 million.

A majority of these newly-poor neighborhoods were places that in 1970 had poverty rates below the national average–places we call “falling stars.” They were arguably middle class 40 years ago, and today are neighborhoods of high poverty.

The sheer scale of the spread of concentrated poverty emphasizes how modest the effect of gentrification has been on the location of the poor. The number of poor living in high-poverty neighborhoods that rebounded since 1970 declined by about 67,000. This is a good maximum estimate of the “displacement” associated with gentrification. Over the same time, the number of poor persons living in newly poor neighborhoods increased by 1,250,000. This suggests that at most, the relocation of the poor attributable to gentrification accounts for perhaps five percent of the increase of population living in concentrated poverty.

We’re coming to understand that place plays a big role in shaping economic opportunity. How we build our cities–and whether we allow concentrated poverty to persist and spread–will have a profound impact on whether future generations will continue to share the American dream.


For more information regarding economic opportunity, economic segregation, and concentrated poverty, go here, and to see the full report including metro-level dashboards and maps, go here.

How Poverty Has Deepened (part 1)

Posted on by CityObservatory Guest

Many talk about poverty—its causes, its effects, and its possible remedies. There is literature on this issue from almost every social science, and no one can summarize it all in one blog post. However, there’s one aspect of our most recent report that I wanted to highlight: the deepening of poverty. Not only are we seeing much more highly concentrated poverty than we used to–but this has the most profound effect on children.

As a quick background if you haven’t read it: the report looks at concentrated poverty in urban neighborhoods (census tracts within 10 miles of the central business district), and concludes that a full three-quarters of neighborhoods that were high-poverty neighborhoods 40 years ago are still mired in poverty today. Additionally, the number of new high poverty neighborhoods has tripled, and the number of poor people in them has doubled, a figure that amounts to 3.2 million people.

smaller infographic

Another way to look at this change is to examine the distribution of poverty rates across both neighborhoods (or census tracts), and population within those neighborhoods. (For those of you that aren’t stats-oriented: a distribution– generally graphically shown as a histogram—gives you an idea of what ‘normal’ looks like, and what kind of variation you would see. The highest point on the histogram is the most common  outcome of any given variable.) The following histograms chart out the poverty rate both in terms of population and census tracts. (So, there were 15 million people in neighborhoods with a 0-5% poverty rate in 1970, 5,000 neighborhoods with a 5-10% poverty rate in 1970, and so on.)

 

As you can see, the general shape is the same across both time periods, and both peak at the 5-10% poverty rate range. However, there seems to be a spreading of both distributions in 2010. That is, while the majority of urban census tracts were in the 5-10% poverty range, the height of this norm was smaller, and there were more people and neighborhoods in the 10% and over bins. This is an indicator that not only are more people in poverty—and economically segregated into high-poverty neighborhoods—but that the experience of high poverty had become more common. The Equality of Opportunity Project has found that intergenerational income mobility is much lower in places with high levels of income segregation; the growing income segregation that we see over this time period means that millions of Americans will not be able to achieve the American dream.

To see the extent of this shift, we examined the tail end of the distribution—basically, the most impoverished neighborhoods. We will discuss this—and its implications—in a post later this week.

City Report: America’s Most Diverse, Mixed Income Neighborhoods

Posted on by Joe Cortright

Today we’re releasing our latest CityReport: America’s Most Diverse, Mixed Income Neighborhoods.

In this report, we use Census data to identify those neighborhoods that have the highest levels of both racial/ethnic and income diversity among all urban neighborhoods in the US.

We were motivated to take on this analysis, in part, because so much attention is focused on the cleavages and segregation of American cities. There’s little question that we’ve become increasingly divided by income, and that racial and ethnic segregation still underpin the persistence of poverty and the lack of opportunity for too many Americans.  And while our country is divided in many ways, we thought it would be helpful to look at those places where our growing diversity was reflected in a neighborhood that was occupied by households of every economic strata.

That’s what this report does:  we look at the places that have the highest levels of racial/ethnic diversity, measured by the likelihood that any two randomly selected neighborhood residents would be from two different racial/ethnic groups (white, black, Latino, Asian or other).  We constructed a parallel measure of income diversity based on the representation of five different household income groups in a neighborhood.  In both cases, we identified the neighborhoods that are in the top twenty percent of all urban US neighborhoods based on each of our measures of diversity.

Our core finding is that there are more than 1,300 such neighborhoods in the US that are home to nearly 7 million Americans.  While about half of these neighborhoods are in just three large metro areas (New York, San Francisco and Los Angeles), nearly every large US metropolitan area has at least one neighborhood that is among the nation’s most diverse, mixed income neighborhoods.

One challenge we face in reporting our results is that the word diversity has become a colloquial euphemism for “people of color.” This report uses the word diversity in a more precise, mathematical context:  diverse means people of different racial and ethnic groups, not simply people of color.  A neighborhood that is 100% Asian or 100% Latino or 100% white or 100% black is not diverse.

Our interest in identifying diverse, mixed income neighborhoods is heightened by the growing body of social science research that shows the widespread negative effects of segregation for cities, for neighborhoods, for families and especially for children. The American Dream, that any child can grow up to achieve success, has been effectively denied to many of those who grow up in neighborhoods that are segregated, where children are cut off from resources and networks that lead to opportunity.

In a sense, these diverse mixed income neighborhoods may provide examples and insights about how we can fashion our cities to be more inclusive.

At least some of the neighborhoods we’ve identified as the most diverse, mixed income are those that are also frequently described as gentrifying. Gentrification is a hot topic in all three of the metro areas we count has having the most diverse, mixed income neighborhoods (New York, Los Angeles and San Francisco). Places like Bedford-Stuyvestant, San Francisco’s Mission District, and downtown Los Angeles all show up as being among the most racially and ethnically diverse, and mixed income of any metropolitan neighborhoods.

The big question, going forward, is whether rapidly changing gentrifying neighborhoods can maintain thise income and ethnic diversity, or whether they will inexorably transition to being all upper income and predominantly white. The available evidence suggests that there’s little likelihood of that happening. Of the neighborhoods that transitioned to multi-ethnic status between 1970 and 1990, fully 90 percent were still multi-ethnic in 2010.  In addition, what happens in these gentrifying neighborhoods is subject to public policy. Cities that use the increase in property values and attendant tax revenues from revitalization to help support affordable housing construction can help assure that gentrifying neighborhoods remain accessible to a wide range of income groups. In addition, how we invest in public space can create opportunities to build bridging social capital between new arrivals and long time residents.


For the full report, including metro level data and maps, visit our CityReport page here. 

Is your city or neighborhood poorer than 40 years ago?

Posted on by CityObservatory Guest

We recently released our latest report, Lost in Place: Why the persistence and spread of concentrated poverty–not gentrification–is our biggest urban challenge. It speaks to a national trend that’s been largely ignored– that urban poor are being concentrated into poorer neighborhoods, and that those neighborhoods are increasing in number. We speak here about some of those implications, and here and here we provide references to what others are saying about gentrification and poverty; here we address economic segregation.

Neighborhood change is by definition a highly local process, and everyone wants to know how their city is performing:  What about their city? Their neighborhood?  Nationally, the number of high-poverty neighborhoods tripled, and the number of people in poverty in those neighborhoods have doubled, but this is not the pattern in every city. In Detroit, the numbers are even more staggering–the population living in poverty is more than 228,000, from less than 40,000 40 years previous.  A few places like Virginia Beach saw an actual decline in concentrated poverty.  Rebounding neighborhoods have been more common in some metros like New York and Chicago.

If you want to see the data for individual metros, we’ve created a city-specific dashboard. Just select the city of interest, and you’ll see a comprehensive set of indicators showing how your metro performed between 1970 and 2010.

As you look at individual cities, keep these overall trends in mind:

  • Most cities only had 1 or 2 “rebounding” neighborhoods, or neighborhoods that were previously high poverty, and by 2010 were below the national average rate of poverty (15%).
  • Nationally, the number of high-poverty tracts tripled.
  • Overall, the number of poor people in those high-poverty tracts doubled.
  • High-poverty neighborhoods that didn’t rebound weren’t stable: they lost, on average, 40 percent of their population over 40 years (both of poor and non-poor persons). This means most “chronic high poverty” neighborhoods saw a dramatic reduction in population by 2010.
  • The majority of the increase in those living in high poverty were in newly poor or “fallen star” neighborhoods. (Fallen stars are neighborhoods that had poverty rates below the national average in 1970, but have poverty rates of 30 percent or higher today).  The number of fallen stars exceeded the number of rebounding neighborhoods 12 to 1.

The process of neighborhood change is often difficult and disruptive, and poverty and gentrification are sensitive topics. Each city is different and has unique challenges; however, most cities follow the national trend of increasing concentrated poverty.  If we are serious about bettering the lives of the poor (and we should be), we need to carefully examine the data about change and look for solutions that are fully grounded in the facts of neighborhood change.

If you want to look at each city’s specific tract-level data, go to the report here and scroll to the maps. We will also be sharing an informational post about how these were made soon- check back in a couple days!

 

Ten More you should read about Gentrification, Integration and Concentrated Poverty

Posted on by Joe Cortright

Gentrification and neighborhood changes are hotly contested subjects.  In the past few years some very thoughtful and provocative work has been done that helps shed light on these issues.  Here we offer ten more of the more interesting arguments that have been put forward as a follow up to our previous post, as well as our report on gentrification and poverty.

  1. Myron Orfield and Thomas Luce looked at the racial composition of urban neighborhoods over the past three decades and conclude that contrary to widespread fears of gentrification, the data clearly show that once a neighborhood becomes predominantly non-white it virtually never reverts to predominantly white. Just two census tracts out of the nearly 1,500 that were predominantly non-white in 1980 became predominantly white in the next three decades, and only seven percent of them became diverse.
  2. Next Cities Sandy Smith outlines some of the strategies that cities are pursuing to minimize displacement of populations in those neighborhoods that are experiencing gentrification.
  3. Daniel Hartley’s study for the Cleveland Federal Reserve Bank of gentrifying neighborhoods shows that neighborhood upgrading is associated with economic improvements for existing residents, in the form of higher credit scores than otherwise similar residents living in neighborhoods that don’t experience gentrification.  Hartley studied credit scores in the gentrifying neighborhoods of 55 cities and found the numbers went up for original residents, whether they owned property or rented.
  4. In his new book, The Concentration of Poverty in the New Millenium, Paul Jargowsky presented data on the number of persons living in census tracts with extremely high rates of poverty (40 percent or greater).  His work shows that the biggest increases in concentrated poverty have been in the Midwest and in smaller to medium sized metropolitan areas.
  5. In their 2011 paper for the Brookings Institution, Alan Berube and Elizabeth Kneebone track the number of neighborhoods of extreme poverty (census tracts with poverty rates of 40 percent or higher) using data from the 2005-09 American Community Survey.  While concentrated poverty had eased during the 1990s, their analysis–The Re-Emergence of Concentrated Poverty: Metropolitan Trends in the 2000s–showed that it had increased substantially and especially affected Midwestern metropolitan areas.
  6. For the past several months, the Furman Center at New York University has been sponsoring a “slow debate” on gentrification, neighborhood change and integration.  Entitled “The Dream Revisited: A Discussion on Neighborhood Gentrification” you’ll find a series of point-counterpoint essays by experts in the field including Lance Freeman and Rachel Godsil
  7. Writing this year in a paper prepared for the American Assembly, Todd Swanstrom considers whether the process of gentrification is different in “legacy cities”–older slower growing or declining industrial cities.  Swanstrom argues that gentrification has been studied mostly in “strong market” cities with high and rising real estate prices, and that the nature and impacts of gentrification are far different in places with weaker real estate markets.   
  8. Concerns about the adverse effects of gentrification on rents often prompts local alliances between renters and community groups to oppose new development.  In an article in Dissent, “Fighting Gentrification, but to what end?” Ben Ross challenges whether opposing development actually protects affordability.  Limiting development limits supply, pushing prices–and rents-higher.  As long as the demand for dense, walkable neighborhoods exceeds the supply, lower income households will find it difficult to afford such neighborhoods.  Instead of opposing density, he argues, we ought to be looking for ways to increase it in places where it makes the most sense.
  9. Kendra Bischoff and Sean Reardon trace out the connections between growing income inequality and growing economic segregation in the nation’s metropolitan areas in the Russell Sage report “More Unequal and More Separate: Growth in the Residential Segregation of Families by Income, 1970-2009.”  Their analysis shows that the number of families living in middle income neighborhoods has declined, and that we are increasingly segregated into high income and local income neighborhoods.
  10. In their pathbreaking work studying intergenerational economic mobility, Raj Chetty and his colleagues at Harvard and Berkeley have generated an impressive body of data about the connections between place and economic opportunity.  They look at the chances that children growing up in the poorest families grow up to have higher levels of income and find that one of the correlates of economic mobility is income segregation:  metropolitan areas with areas of concentrated poverty have less economic mobility.

Ten things you should read about Gentrification, Integration and Concentrated Poverty

Posted on by Joe Cortright

Gentrification and neighborhood changes are hotly contested subjects.  In the past few years some very thoughtful and provocative work has been done that helps shed light on these issues.  Here we offer a baker’s dozen of some of the more interesting arguments that have been put forward.

  1. Daniel Kay Hertz explores the contradictions that emerge between our widely voiced aspiration for integration and the knee-jerk tendency to condemn segregation.
  2. Jonathan Rothwell and Douglas Massey present research showing that the education of one’s neighbors is nearly half to two-thirds as powerful in influencing children’s long term economic prospects as is the education of their own parents.
  3. In “Beyond Gentrification”, Stephanie Brown explores the complex and contradictory concepts that are conflated in the common use of the word gentrification and describes a new framework for thinking about neighborhood change in mixed-income multi-cultural communities.
  4. Margery Turner of the Urban Institute speaks to the connections between place and economic improvement.  She describes how mobility turns out to be an important way that families actually escape poverty. She argues that we need to move from place-based to place-conscious strategies, and explicitly allow for the fact that some neighborhoods will best be viewed as “launch pads” to help people get going.
  5. Barbara Sard and Douglas Rice document the limited reach of housing assistance programs.  They summarize the evidence that high-poverty neighborhoods, which are often violent, stressful, and environmentally hazardous, can impair children’s cognitive development, school performance, mental health, and long-term physical health.  Their article notes that despite abundant evidence of the negative effects of living in high poverty neighborhoods, federal housing assistance programs tend to concentrate the poor in existing neighborhoods of high poverty.
  6. Ed Glaeser and Jacob Vigdor review the evidence on changing patterns of racial segregation in the United States provided in Census 2010.  They conclude that the nation is becoming less segregated, chiefly by the decline of all-white neighborhoods.  But predominantly African-American neighborhoods have not transitioned to mixed race status.  They conclude that for every prominent example of a black neighborhood undergoing gentrification—in Harlem, Roxbury, or Columbia Heights—there are countless more neighborhoods witnessing no such trend. Instead, the dominant trend in predominantly black neighborhoods nationwide has been population loss.
  7. The media epicenter of the gentrification debate has been the Google buses that carry high tech workers from their homes in San Francisco to jobs in the Silicon Valley.  Tech Crunch’s Kim Mai Cutler offers a far-ranging analysis of the connections between economic growth, building restrictions, housing affordability and income distribution in her provocative essay:  “How Burrowing Owls Lead to Vomiting Anarchists (or SF’s Housing Crisis Explained).”
  8. Planner Pete Saunders writes that the move of talented young people back into cities creates the opportunity to strengthen the historically limited  job and social networks that have limited the economic opportunities of those living in neighborhoods of concentrated poverty. The challenge is that too often, neighborhood change is treated as a zero sum game.  We’re missing opportunities to use the attachment to place–through simple neighborhood-level means like picnics, sports leagues and similar events mediated by community groups to knit stronger bonds between long time residents and newcomers.
  9. Robert Sampson’s work points up the strong racial component to income segregation.   More than half of black kids born in 1995 in high poverty neighborhoods remained there in 2012; fewer than 15 percent had moved up to “low poverty.”  A third of black children growing up in low poverty ended up in high poverty neighborhoods; compared with 2 percent of white children.
  10. Patrick Sharkey’s book, Stuck in Place, shows when neighborhoods change, the original residents benefit substantially. In adulthood, black children whose neighborhoods changed around them in ways that lead to less concentrated poverty did much better in terms of income, earnings and wealth compared with other black children who started in very similar neighborhoods but whose neighborhoods did not see the same degree of change.

There is more to explore on this topic elsewhere, and this is by no means an exhaustive list. However, we think it’s a good start. To read more about associated topics like economic opportunity on our site, go here.