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The economic threat to cities isn't gentrification; it's the opposite

A man waits for a bus in Detroit, one of the US cities hardest-hit by poverty.
A man waits for a bus in Detroit, one of the US cities hardest-hit by poverty.
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American cities are growing, and as they grow, they're adding lots of high-poverty neighborhoods. Nearly three times as many "high-poverty" census tracts existed in 2010 as in 1970, according to a new study by the Portland-based think tank City Observatory. That's unsettling on its face but even more so when you see the havoc a poor neighborhood can wreak on a resident's chances at a good life.

Forget gentrification — this is a bigger problem

The below chart from the study tallies up the people living in these neighborhoods in 1970 and 2010. What it shows is that the number of people living in high-poverty neighborhoods — those with poverty rates of 30 percent or more — has roughly doubled since 1970. That's because these neighborhoods of concentrated poverty have a tendency to stay that way, even while new ones sprout up.

Poverty tracts new

Source: City Observatory

That share of people living in high-poverty neighborhoods isn't huge — around 8.9 percent of all Americans living in poverty in 2010, according to US Census Bureau data. But the population of high-poverty neighborhoods has doubled since 1970, from 2 to 4 million. Over that same period, the US population as a whole grew by around 50 percent. In addition, the number of high-poverty census tracts in cities nearly tripled from 1,100 to 3,100.

As City Observatory highlights, we often think of gentrification as a big threat to urban areas, driving up the cost of living for people living in poorer areas and eventually forcing them out. You would think that'd lead to a lot of these neighborhoods rebounding out of poverty, albeit with mixed consequences for people there originally. But it appears the bigger threat by far is neighborhoods remaining mired in poverty and new neighborhoods falling into it.

The insidious underlying problem: mobility

Residents of poor neighborhoods are increasingly sectioned off from people who do not live in poverty. More economic segregation means less economic mobility — the more poor people live separate from rich people, the less likely they are to move up the income ladder.

As the Pew Economic Mobility Project found in a 2013 report, segregation grew markedly between 1970 and 2000. Another 2011 study found that 44 percent of Americans in large metro areas lived in "middle class neighborhoods" as of 2007, down from 65 percent in 1970 — during that time, neighborhoods increasingly sorted by income, with more and more families living in "rich" or "poor" areas and fewer living in mixed-income places.

And more segregation is correlated with significantly lower mobility, as measured by intergenerational elasticity — that is, the degree to which a person's earnings can be predicted by looking what her parents earned. A poor person living only among fellow poor people will have less opportunity to improve her lot in life.

mobility and segregation

Source: Pew Economic Mobility Project

What causes this decline in mobility? Pew explains that in a relatively evenly distributed city, rich parents might pass their advantages on to their kids by, say, giving them money or sending them to private school or buying them books. But they can't boost their kids' performance by moving to a richer neighborhood, because those neighborhoods don't exist.

But in a more segregated city, "parents also can transmit advantage by selecting a home in a wealthier community, where the schools are likely to be of higher quality and where there are probably greater economic opportunities," write the Pew authors. Meanwhile, they add, "low-income families are likely to live in disadvantaged neighborhoods, where schools are lower quality, crime and violence are more common, and economic opportunities are scarce."

Those disadvantages of living in a high-poverty neighborhood make it all the harder for that neighborhood to move up and become a "rebounder," as the report puts it. The authors note that a high concentration of poor people in one neighborhood means fewer social connections that would allow those residents to find jobs and improve their incomes (and the neighborhood itself). Likewise, they write, "having college graduates as neighbors appears to increase the probability that low-income residents will themselves obtain a college degree."

When the population of people in these poor neighborhoods has grown so heavily, it means there are that many more people who are not only poor living in a given city but living in neighborhoods that help keep them poor. The problem, then, is what to do about it. If the most powerful people in society, the wealthy, also increasingly live apart from the poor, they have little immediate incentive to change this segregation, and are unlikely to observe poverty firsthand. That means they're less likely to take action to halt growth in neighborhoods that have diminished wealth, school quality, and safety, and a lower level of opportunity than the rich communities just blocks away.