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Forget The Redistribution Of Wealth: Let’s Redistribute Neighborhoods

Where you grow up shapes your adult well-being, especially if you’re poor–which is why we should worry that communities are more segregated than ever.

Forget The Redistribution Of Wealth: Let’s Redistribute Neighborhoods
[Illustration: Chrissy Curtin for Fast Company]

Growing up poor in the U.S. isn’t always a life sentence to poverty. But growing up poor in a very poor neighborhood is much closer to one.

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It’s impossible to talk about inequality today without talking about housing, neighborhoods, and urban life. Study after study today is showing that where you grow up hugely affects how well you do for the rest of your life, especially if you’re poor.

“Low-income kids in poor neighborhoods don’t do as well at life. That’s hardly profound, but we are seeing it great detail,” says Karl Alexander, a researcher at Johns Hopkins University who documented poverty’s “long shadow” by following almost 800 first graders over 25 years in Baltimore, one of the nation’s most economically and racially segregated cities in the nation.

“Poor children tend to be triply disadvantaged: They experience poverty at home, they experience poverty in their neighborhood, and they experience poverty in the schools they attend,” he says. “All are separately distinctive risk factors for struggling. Think of what happens when you multiply them together. It’s not a pretty picture.”

In a book published last year, he reported shocking disparities observed as the kids in his study grew up to be adults. Of the low-income children enrolled, only 4% had finished a four year college by age 28. And among those poor kids, being white helped them later. Compared to blacks, low-income whites were better employed and earned more, despite having about equal education and crime records.

Take a minute and think about the neighborhood where you grew up. Was it a mixed community of races? Of economic classes? If so, you grew up in a rare place in America–a place that is growing even more rare today. Inequality in where people live is on the rise, and not just in Baltimore.

More Americans live in high-poverty areas than ever in history, defined usually as places where more than 30% to 40% of residents are below the poverty line. The number of people who live these neighborhoods of “concentrated poverty” has doubled since 2000, especially in smaller cities. There are huge racial disparities in these neighborhoods, too. One in 4 African Americans and 1 in 6 Hispanics live in an area of concentrated poverty, compared with 1 in 14 whites. While explicitly racist policies such as “redlining” have subsided, their legacy remains in how neighborhoods are racially and economically segregated today.

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The link between location and lives

Montgomery County, Maryland–less than an hour’s drive from Baltimore–is a unique case that shows it doesn’t have to be this way. It is among the wealthiest counties in the nation, and its school system is among the best. It also serves its low-income families relatively well. Like some other cities, it requires some real estate developers to rent a portion of their homes at affordable, below market rates. More uniquely, the county itself also reserves the right to buy some of these homes to create public housing for the poor. The result? Poor families, earning an average of $22,500 a year, living right alongside the affluent.

In 2010, a researcher, Heather Schwartz at the RAND corporation, looked at elementary school kids in the country. She found that children in public housing who were attending elementary schools where few other children were in poverty “far outperformed” those who were in schools with higher poverty rates. For researchers, it’s always been hard to know how much place matters in determining someone’s life prospects, but clearly one’s neighborhood and education are closely tied together.

Montgomery County is so wealthy that it’s example might be hard to translate to other cities. In places with high concentrated poverty, people are disadvantaged for so many reasons that teasing apart one thing from another isn’t easy. But that’s changed with a forward-thinking research program created by the federal government in the mid 1990s that tried to further look at the effects of “place.”

In four cities, the Moving to Opportunity program randomly gave some poor families vouchers that required them to move to relatively well-off neighborhoods, as well as housing counselors to help them make the transition. This group was compared to others who received regular Section 8 housing vouchers, which usually result in low-income families staying put in neighborhoods of high poverty.

For many years, the program seemed like a failure. Moving to wealthier areas did not help the parents earn more money, nor kids improve in school. But more recently researchers at Harvard University’s Equality of Opportunity Project revisited the data, now that the kids who were young when the program started have entered the workforce. They found a much larger effect: Moving a child (average age of 8) out of public housing to a low-poverty area could increase their total lifetime earnings by $302,000. Every year they were out of public housing made an incremental difference.

The same researchers also looked at tax records for 5 million families who moved across counties over the last decade. They were able to isolate the effects of the move on their well-being, and therefore, identify “low opportunity” and “high opportunity” cities. Their results showed strikingly how some counties and cities were outperforming others in terms of upward mobility: Low-income boys who moved to cities like Atlanta, Baltimore, Chicago, Tampa, and Milwaukee faced some of the worst odds, earning about 35% less than peers who grew up in the best areas for mobility, which included cities like San Diego, Salt Lake City, Las Vegas, and Providence, Rhode Island. Girls earned about 25% less.

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Unsurprisingly, the research found that the best places for poor kids were less segregated by income and race. The poor kids from the more income-diverse areas also tended to have better test scores and lower levels of income inequality. They had shorter commute times, higher marriage rates, and lower levels of violent crime.

“Probably the most important policy implication of this is a general lesson: that where you grow up matters. Place matters. That said, there’s a lot of room for policy. Places can do a lot of things to affect kids, but we don’t necessarily know the right policy in any particular case,” says Jamie Fogel, a postdoctoral researcher with Harvard’s Equality of Opportunity group.

Housing policy can only go so far

Despite the findings of the Harvard project, escaping poverty is not just as simple as picking up to move. In Alexander’s study of families in Baltimore, poor families who moved to a new area tended to end up in other poor neighborhoods, whether in the same city, in the suburbs, or across the country. It’s also not clear to housing advocates whether the best strategy is to try to break up areas of concentrated poverty and integrate wealthier communities or provide better resources to those who live in high-poverty areas currently. After all, not everyone wants to move.

Finer tools are needed. For many, one place to start is the 2 million families who are using the federal government’s Housing Choice Voucher program, otherwise known as Section 8. Advocates believe that there are many ways the U.S. Housing and Urban Development Department (HUD) could better use these vouchers to encourage more economic integration, such as providing larger rent subsides that help families to move to better neighbors and assigning “relocation counselors” who would help them do so.

A bigger change, though, explicitly takes aim at the racial segregation of poor neighborhoods. As a result of Harvard’s project, HUD itself recently set new rules that will require communities that receive federal funds to do more to analyze their housing data and prove that they are working to reverse patterns of racial housing segregation, as required by federal fair housing laws. In many cities, landlords don’t legally have to accept Section 8 vouchers, and many in wealthier or whiter communities don’t. Even when they can afford an apartment, it can be hard for minorities to move into wealthier neighborhoods. In St. Louis County, for example, whites are approved for home loans at higher rates than blacks of similar incomes, according to the New York Times.

Still, there are limits to what federal housing policy can do, and these are small steps. The bigger project will be to bring better resources to poor communities and reinvigorate areas of concentrated poverty, as well as create more mixed neighborhoods economically and racially.

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“Housing investments in themselves don’t change what kinds of jobs are accessible to people, what they can earn, whether there are parks, whether neighborhoods are safe,” says Barbara Sard, vice president for housing policy at the Center on Budget and Policy Priorities. “The federal government can’t solve these problems alone. States and localities have a more direct authority over education, over zoning, and over lots of the issues that affect where people live and what neighborhoods are like.”

The rise of microsegregation

Real change might have to come down to very local efforts. The irony of gentrification and urban renewal is that some poor and minority neighborhoods are now more mixed-income than ever before, even as rising housing costs drives some poorer households away. In historically black or Latino neighborhoods like Shaw in Washington, D.C., the Mission in San Francisco, or Harlem in New York City, relatively affluent young people are living on the same blocks and even the same buildings as long-term residents, both potentially enjoying the improved amenities that gentrification brings.

The lack of affordable housing as cities become more and more desirable is a problem that no city has managed to effectively deal with yet. But what about lower-income residents who do stay put in their gentrifying, newly diverse neighborhoods? The evidence above shows that they should see benefits, such as better schools, job opportunities, and safer streets. But American University researcher Derek Hyra says this, too, is not always the case because of “microsegregation” among income classes.

“On the streets, this community looks very diverse, but when you get into the social fabric of the community, it starts to segregate–the churches, the restaurants, the schools,” Hyra says. This is a problem, he thinks, because it is the “strength of weak ties” that is what propelled the positive results seen in the Harvard study. In other words, low-income kids who got to know affluent people benefited from the opportunities, whether in jobs or education or political sway, that came with their social interactions.

But in his study of D.C.’s Shaw neighborhood, which used to be 90% black and is now about 55% white, people live next to one another but not alongside one another. The schools, for example, are still overwhelmingly black. Neighborhood associations start to be taken over by the interests of the newcomers, who might advocate for dog parks and bike lanes, but not necessarily better schools because they are sending their kids elsewhere.

“If we want to solve some of the problems of growing inequality, we have to to increase the income and life chances of low-income people, but that doesn’t just mean doing low-income communities. We need to facilitate social interaction, and grease the wheels of micro-level integration. And that’s not something that federal housing policy has really tackled,” says Hyra.

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In other words, economic and racial integration won’t be enough unless there is more social integration too. Says Hyra: “We need to have community based organization that help bridge populations that have been segregated,” he says. “We’ve been segregated in the U.S. for so long, to expect upper income and low income people living in a community together will work together to solve problems, is a mistake.”

About the author

Jessica Leber is a staff editor and writer for Fast Company's Co.Exist. Previously, she was a business reporter for MIT’s Technology Review and an environmental reporter at ClimateWire.

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