Workers & Economic Inequality

How Income Segregation Broke the Middle Class

Blog Post by: Benjamin Landy , on October 31, 2013

American society is more divided today than in any other year since the Great Depression, with massive concentrations of wealth and income in the hands of an elite few.

Such extreme inequality should push Americans toward a more redistributive politics. Yet our “one person, one vote” system has proven surprisingly resistant to substantive policy change. It’s a problem that has confounded political scientists: Why hasn’t democracy slowed rising inequality?

“Income segregation” is one possibility. According to a new analysis of census data by researchers Kendra Bischoff of Cornell University and Sean Reardon at Stanford, America’s archetypal middle-class neighborhoods are disappearing at an astounding rate. The result is fewer Americans interacting with people outside their own socioeconomic class, leading to less empathy and more political polarization. Ex Uno, Plures.

In 1970, 64.7 percent of families lived in “middle-income” neighborhoods (defined here as having a neighborhood median family income between 80 percent and 125 percent of the metropolitan area median income). Only 8.4 percent of families lived in poor neighborhoods (less than 67 percent of the area median), and just 6.6 percent lived in affluent neighborhoods (more than 150 percent of the area median).

But as the rich grew richer over the last forty years, they began leaving their middle-income and poor neighbors behind—mostly in search of better schools and safer streets. By 2009, the proportion of families living in middle-income neighborhoods had shrunk to 42 percent. The proportion living in either poor or affluent neighborhoods more than doubled.

The New Normal

Bischoff and Reardon offer three factors that may explain how America’s formerly middle-class topography fragmented into pockets of poverty and affluence.

The first factor is children. Bischoff and Reardon found income segregation was most acute in communities with growing numbers of children, suggesting the upper-middle class and affluent move to neighborhoods where higher property taxes, lower crime and more engaged parents mean better-quality school systems.

Unfortunately, that also means less tax revenue and fewer resources for the poorer districts that wealthy families leave behind. As Century Foundation senior fellow Rick Kahlenberg has documented, socioeconomic segregation of schools and communities has a compounding effect on the uneven distribution of social and human capital. Educational immobility perpetuates the accumulation of advantage and disadvantage across generations.

Another factor identified by Bischoff and Reardon is intra-racial segregation. Over the last forty years, rising incomes allowed the black and Hispanic middle class to abandon areas of concentrated poverty to a greater extent than white families.

This is partly because poor minority neighborhoods start off with lower income levels and fewer advantages than poor white neighborhoods, meaning higher returns for middle class minority families who move from urban to suburban areas. But it’s also the byproduct of soaring income inequality among minority groups in the 1970s and 1980s. In the 2000s, lenient mortgage practices transformed those gains into increased homeownership, further driving a wedge between middle- and lower-income minority families.

As a result, poor black families had fewer middle-class black neighbors in 2009 than in 1970. However, Bischoff and Reardon note that this shift was not because middle-class black families gained access to middle-class white neighborhoods; on the contrary, middle-class black families were much more likely to live in neighborhoods with low-income white neighbors than comparable middle-class white families.

Hiding in the background of all these trends is deindustrialization. Between 1970 and 2009, the share of workers employed in manufacturing declined by nearly 60 percent, as middle-class factory jobs were offshored to China and other low-wage countries.

For millions of blue-collar workers, the impact was devastating. Dozens of mixed-income industrial cities like Detroit and Flint, Michigan collapsed into urban cores of concentrated poverty, surrounded by affluent suburbs on the periphery.

Separate and Unequal

The long term implications of this incredible migration of capital—human, financial, social or otherwise—cannot be overstated.

In 2010, the richest 10 percent of families received approximately 46 percent of all U.S. income. As Bischoff and Reardon write, the increasing geographic isolation of affluent families means a significant proportion of society’s resources are now concentrated in a small number of wealthy neighborhoods.

"If socioeconomic segregation means that more advantaged families do not share social environments and public institutions (schools, public services, parks, etc) with low-income families, advantaged families may hold back their support for investments in shared resources. Such a shift in commitment may have far-reaching consequences for the rest of society."

Indeed, without a community, there can be no “public good.” In a country that strives to provide equal opportunity for all, the rise of income inequality and segregation represents a major obstacle for redistributionist policy and progressive politics writ large.

Tags: socioeconomic integration, segregation, russell sage, rick kahlenberg, redistribute wealth, progressive politics, middle class, income segregation, income inequality, economic policy,

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