Charlotte’s poor struggle to advance | Charlotte Observer

This story was originally published July 23, 2013.

If you’re born poor in Charlotte, odds are you’ll stay that way.

A new study on income mobility shows that climbing the economic ladder happens far less here than in other parts of the country.

Likewise, the chances that the poor will reach middle class and beyond also are notably low in the metropolitan areas of Raleigh, Atlanta, Memphis, Indianapolis, Cincinnati and Columbus, Ohio.

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By contrast, the Northeast, Great Plains and West, including the cities of New York, Boston, Salt Lake City, Pittsburgh, Seattle and wide swaths of California and Minnesota, offer far more upward economic movement.

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

In North Carolina, for example, more and more poor people live in cities like Charlotte. Mecklenburg County now has some of the most intensive poverty in the state, according to the UNC Center for Poverty, Work and Opportunity. From 2005 to 2010, Mecklenburg residents living in poverty increased by 58 percent, compared with an overall population growth of 18 percent.

“The fact is it’s really hard to move out of deep poverty,” said Mary Newsom, associate director of the Urban Institute of UNC Charlotte. “In North Carolina, the most entrenched poverty is now in the cities.”

The economic-mobility study, to be released this week, is based on millions of anonymous earnings records analyzed by Hendren and a team of other top academic economists. It is the first with enough data to compare upward mobility across metro areas.

These comparisons provide some of the most powerful evidence so far on what drives people’s chances of rising beyond the station of their birth, including education, family structure and the economic layout of metropolitan areas.

The variation from place to place does 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, like Atlanta and Seattle.

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 under the age of 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 four 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.

Charlotte: The community model

Charlotte’s lack of class mobility belies the fact that many of its residents remain active in churches and other groups, and that its public schools are consistently cited among the most successful urban districts in the country.

However, much of the city’s poverty remains concentrated. To be sure, Charlotte offers examples of mixed-income areas and hopes to develop others. But for every First Ward, there is a higher-income neighborhood that has objected to public housing.

Likewise, the school district’s national standing may be skewed somewhat by its high-performing suburban schools, even as the poverty rate in its urban classrooms continues to grow.

Since a federal judge ordered the school district to drop its longstanding desegregation plan, “Schools have all started to reflect their neighborhoods,” Newsom said. Concentrating poor children in classrooms, “makes it much hard to educate them, much harder and more expensive. But that’s the model the community has chosen.”

Mike Rizer, director of community relations for Wells Fargo and a countywide advocate for affordable housing, says Charlotte has made strides in making its neighborhoods more diverse. For example, for the first time, the City Council has approved a temporary subsidy for families moving into independent housing. That will give them residential access to more parts of the city, he believes.

“The social capital that folks living in poverty can get from being around the middle class is critical,” said Rizer, chairman of the Charlotte-Mecklenburg Housing Coalition.

Black, white, poor

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.

Still, earlier studies have already found that education and family structure have a large effect on the chances that children escape 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 was already making at least $100,000 in family income, according to the new study. Among adults who grew up in the bottom half of the 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 – like 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 like Atlanta and Memphis, by comparison, upward mobility appears to be substantially lower than in any other rich country, Chetty said.

Especially intriguing 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.

David Leonhardt from the New York Times and the Charlotte Observer’s Michael Gordon contributed.

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