Geography seen as barrier to climbing class ladder in US

Staff and wire reportsJuly 23, 2013 

Where you live may play a major role in your ability to move beyond poverty, according to a new study that some researchers are calling the most detailed portrait yet of income mobility in the United States.

Climbing the income ladder occurs less often in the Southeast and industrial Midwest, the data shows, with the odds notably low in Raleigh; Charlotte; Atlanta; Memphis, Tenn.; Indianapolis; Cincinnati and Columbus, Ohio. By contrast, some of the highest rates occur in the Northeast, Great Plains and West, including in New York, Boston, Salt Lake City, Pittsburgh, Seattle and large swaths of California and Minnesota.

“Where you grow up matters,” said Nathaniel Hendren, a Harvard economist and one of the study’s authors. “There is tremendous variation across the U.S. in the extent to which kids can rise out of poverty.”

Gene Nichol, a law professor and director of the UNC-Chapel Hill Center on Poverty, Work and Opportunity, had not pored over the study. But he said he is not surprised by the findings.

“I think of the South as the national home of poverty,” Nichol said. “We have more poor people and more politicians who don’t care about poverty. The reluctance to take significant steps to deal with poverty is greater in the South, and I think that’s never been very far from the perception of race.”

But Harvey Schmitt, president and CEO of the Greater Raleigh Chamber of Commerce, said he didn’t think Raleigh should be mentioned as one of the places with notably low odds.

“That’s silly,” Schmitt said. “It’s preposterous.”

Though Schmitt had not seen the study, he offered details about the city’s demographics that he said painted a different picture.

He said one in three people who now live in Raleigh were not here a decade ago. And he said that what was once a “government town” has grown up to add a broader diversity of job opportunities at different levels.

After looking at a map about the study, Schmitt said he was further confused about what the researchers perceived as the Raleigh region. The map, he said, included a larger swath than Wake County, including rural areas and possibly Durham.

“I just don’t sense there are any intrinsic barriers in Wake County,” Schmitt said. “We just did not grow up as a town with a large ‘have’ and ‘have-not’ population.”

The study, released this week, is based on millions of anonymous earnings records. The comparisons of upward mobility across metropolitan areas look at factors that seem to drive people’s chances of rising beyond the station of their birth, including education and family structure.

Atlanta vs. Seattle

Variations do not stem simply from the fact that some areas have higher average incomes: Upward mobility rates, Hendren said, often differ sharply in areas where average income is similar, such as Atlanta and Seattle.

The gaps can be stark. On average, fairly poor children in Seattle – those who grew up in the 25th percentile of the national income distribution – do as well financially when they grow up as middle-class children – those who grew up at the 50th percentile – from Atlanta.

Geography mattered much less for well-off children than for middle-class and poor children, according to the results. In an economic echo of Tolstoy’s line about happy families being alike, the chances that affluent children grow up to be affluent are broadly similar across metropolitan areas.

The team of researchers initially analyzed an enormous database of earnings records to study tax policy, hypothesizing that different local and state tax breaks might affect intergenerational mobility.

What they found surprised them, said Raj Chetty, one of the authors and the most recent winner of the John Bates Clark Medal, which the American Economic Association awards to the country’s best academic economist younger than 40.

The researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly.

The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.

But the researchers identified some broad factors that appeared to affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods.

Income mobility was also higher in areas with more two-parent households, better elementary schools and high schools, and more civic engagement, including membership in religious and community groups.

Regions with larger black populations had lower upward-mobility rates. But the researchers’ analysis suggested that this was not primarily because of their race. Both white and black residents of Atlanta have low upward mobility, for instance.

The authors emphasize that their data allowed them to identify only correlation, not causation. Other economists said that future studies will be important for sorting through the patterns in this new data.

Escaping poverty

In previous studies of mobility, economists have found that a smaller percentage of people escape childhood poverty in the United States than in several other rich countries, including Canada, Australia, France, Germany and Japan. The latest study is consistent with those findings.

Whatever the reasons, affluent children often remain so: One of every three 30-year-olds who grew up in the top 1 percent of the income distribution scale was making at least $100,000 in family income, according to the new study. Among adults who grew up in the bottom half of income distribution, only one out of 25 had family income of at least $100,000 by age 30.

Yet the parts of this country with the highest mobility rates – such as Pittsburgh, Seattle and Salt Lake City – have rates roughly as high as those in Denmark and Norway, two countries at the top of the international mobility rankings. In areas such as Atlanta and Memphis, by comparison, upward mobility appears to be substantially lower than in any other rich country, Chetty said.

Especially intriguing, Chetty said, is the fact that children who moved at a young age from a low-mobility area to a high-mobility area did almost as well as those who spent their entire childhoods in a higher-mobility area. But children who moved as teenagers did less well.

That pattern makes economists more confident that the characteristics of different regions – as opposed to something inherent and unchangeable in the local residents – are helping cause the varying mobility rates.

Staff writer Anne Blythe and The New York Times contributed to this report.

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