Neighborhood Inequality and What to Do About It

neighborhood_advantage2by James A. Bacon

Neighborhoods in the Richmond metropolitan area are the most segregated by wealth and income in Virginia and the third most segregated of any region in the United States, according to data crunched by Urban Institute fellow Rolf Pendall. By the same token (assuming I read the fine print in tabular form correctly), Fredericksburg is the least segregated by wealth and income of any region in Virginia and the country.

As the income gap widens in the United States, so does the gap between the most affluent and the poorest neighborhoods, contends Pendall in a new report, “Worlds Apart: Inequality in America’s Most and Least Affluent Neighborhoods.” This polarization has occurred despite the urban revival of many U.S. metros.

“Though not as far apart in space from the bottom neighborhoods as affluent suburban and exurban enclaves,” writes Pendall, “top neighborhoods in central cities still are separate worlds from those of the nation’s lowest-income residents. And even the modest physical distance between top and bottom neighborhoods is often interrupted by physical barriers like Washington’s Anacostia River, the San Francisco Bay, and Interstate 35 in Austin.”

Instead of preserving islands of privilege, he argues, public policy should encourage the creation of mixed-income neighborhoods and districts in central cities and suburbs and invest more heavily the nation’s poorer neighborhoods.

One could argue with Pendall’s policy prescriptions — what should we do — but his description of the facts on the ground — what is — seems pretty straightforward. Insofar as most of us would like to see more equality of opportunity in our society, and insofar as an individual’s opportunities are shaped by his or her neighborhood environment, it is discouraging to see such wide disparities in the Richmond region where I live.

(If I were like some participants in this blog, I would go, “Oh, Urban Institute, that’s a liberal think tank, therefore it’s biased, therefore, I can disengage my brain and discount anything it says. But I try not to work that way. Pendall’s methodology seems perfectly reasonable, and if there are uncomfortable realities that must be grappled with, I will grapple with them.)

A couple of observations about the Virginia data. First, the Washington region (or, more precisely, commuting zone) has the strongest concentrations of wealth of any of the metros, even more than Richmond. But the poverty in its least advantaged neighborhoods appears to be more diluted, while in Richmond poverty is more concentrated.

Second, Fredericksburg seems notable for the notable lack of concentrated poverty. I can confirm this with some anecdotal evidence. My mother lives on Caroline Street, one of the more desirable streets in Fredericksburg’s historic district — but she is only two blocks from a housing project. As Pendall observes, smaller regions tend to have less inequality between neighborhoods, and Fredericksburg is one of the smallest regions covered in his survey.

What to do about it. To a carpenter, as the old saying goes, every problem looks like nail. Urban planners are prone to looking for urban planning solutions to the problems they observe. But solving the problem of extremes in wealth and poverty cannot readily be accomplished simply by mixing poor people and affluent people together. One of the advantages of being affluent is that it affords one the opportunity to separate oneself from crime, poor schools, disorderly conduct. In my observation, even liberal rich people like to live in neighborhoods that are safe and don’t have trash on the street. Politically, it will be difficult to compel the rich, powerful and well connected to do something they don’t want to do. It’s a zero-sum game.

To my mind, the better way to address the inequality of neighborhoods is to address the inequality of the residents within the neighborhoods. One way to do that is to scrap a monetary policy that rewards the wealthy (holders of stocks and bonds) and punishes small savers (whose financial assets reside in bank accounts and CDs). Another way to address income inequality is to embrace a tax and regulatory regime that encourages economic growth, which encourages job creation, which, when the labor market tightens enough,  promotes income growth for wage earners.

Bacon’s bottom line: The phenomenon Pendall describes is real.  But the policy prescription at which he hints addresses the surface of the problem, not the underlying cause.

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  1. Hill City Jim Avatar
    Hill City Jim

    In what world is Bristol’s population 604,000?

    1. LarrytheG Avatar

      MSA? …………….

    2. My bad. That’s the Kingsport-Johnson City-Bristol MSA.

    3. And don’t ask me why Pendall separated “Norfolk” from “Virginia Beach.” I have no clue.

    4. The population figures are based on “commuting zones,” though I’d guess this is a much less scientific number than the census figures for an MSA. The USDA commuting zone numbers are very inconsistent, and in my opinion, seem to be a poor population number with which to use in this kind of research. I was wondering how Lynchburg got excluded since every other city from large to podunk (Anniston AL?) was included.

      1. LarrytheG Avatar

        had not noticed that… so need to go off and learn.. but curious it was used instead of MSA.

  2. LarrytheG Avatar

    re: ” To my mind, the better way to address the inequality of neighborhoods is to address the inequality of the residents within the neighborhoods. One way to do that is to scrap a monetary policy that rewards the wealthy (holders of stocks and bonds) and punishes small savers (whose financial assets reside in bank accounts and CDs). Another way to address income inequality is to embrace a tax and regulatory regime that encourages economic growth, which encourages job creation, which, when the labor market tightens enough, promotes income growth for wage earners.”

    is this two parts? 1. redistribute income and 2. yadda yadda job creation?

    But at least we’re slowly starting to recognize that neighborhood reflect the reality of not only income demographics but education demographics.

    And our first cut at fixing this – busing – was and is a massive failure because of overwhelming opposition from citizens..

    before that we tried “Separate but Equal” and that failed to pass Constitutional muster though it’s still pretended by apologists … of the de-facto segregation of many schools these days due to geographic demographics.

    My question is why should school performance also correlate – and no I do not buy the “lazy parent”/ “bad teacher” idea at all when we HAVE REAL EXAMPLES of schools that have high numbers of economically disadvantaged and still manage much better results than the majority of such schools with similar challenges.

    Finally – the non-public school voucher crowd who say they can fix the problem – apparently don’t want the tougher demographic kids to teach AND they ALSO don’t want to be held to the same academic standards… as the schools they’d compete with.

    what not, for instance, use student growth potential, SOLS, or NAEP, etc – across the board for ALL schools – public or quasi or non-public – if they are going to use tax dollars?

    Finally – the purpose of education for the economically disadvantaged – should at the least INCLUDE – TRAINING for jobs… it should be in the K-12 track .. the goal being not only to graduate them – but to have them educationally qualified and equipped for the jobs that are available as opposed to kicking them out onto the streets – functionally illiterate – and then asking why they end up in prison leaving behind single parent families.

    1. TooManyTaxes Avatar

      Agree there needs to be more vocational education in high schools. College is not met for everyone (despite what their parents or professional educrats think). There are many good jobs that young people can do, but many need specific training. Fairfax County’s academies are a good example of how this can be done.

      1. LarrytheG Avatar

        My understanding is that Fairfax does a pretty good job at VocEd.

        I’m betting that places like RIchmond and Norfolk – any place with high black unemployment – needs to be looked at to see how to compare to places like Fairfax.

        Speaking plainly here – it used to be that kids who did not go to college would find a manufacturing type job or a tradesman or medical job but manufacturing is being robotisized and other employment – also modernized to the point where entry level requirements are much higher than what most K-12 provides these days. CEOs and major corporations say this.

        with economically disadvantaged – many have parents that also lack enough education to live beyond poverty level.

        if the school is not resourced to deal with the disadvantaged needs – the kids will grow up like their parents – bare, minimal educations – unable to qualify for any but the most menial work.

        And the option of going into the military – and getting training and post service education benefits is no longer open to them because many cannot
        even pass the basic armed forces entrance tests.

        we have two choices – let it continue to fester.. watch more Detroits and Baltimores grow and expand – or set our minds to truly do something that works.

  3. Basil Avatar

    I disagree. I think economic segregation is a linchpin of systemic poverty. The majority of these neighborhoods were intentionally developed through misguided housing policies/urban renewal that concentrated poverty. The Jackson Ward provides a great example of a once vibrant mixed-income community destroyed by the Fed’s massive policy failures.

    While low-income adults that move from a poor neighborhood to a mixed income one don’t tend to see an economic benefit, a number of studies show that children of low-income parents in an economically diverse area have more economic mobility. They are more likely to receive a better education and have better role models outside the school/home.

    P.S.- The majority of people (rich/poor, conservative/liberal) like to live in safe, clean neighborhoods.

  4. Les Schreiber Avatar
    Les Schreiber

    I don’t understand income inequality and housing patterns are the fault of the federal reserve???Housing patterns in Richmond City aren’t much different than when I grew up in the 1950’s and 1960’s. The real change came in the late 1960’s when the courts ordered busing to solved racial bias in the schools.
    “White Flight”sucked out the white middle in the city.
    I don’t see the relationship between low interest rates as the cause of this. Remember the Congressional Republicans brought on the sequester which has taken away the chance for any real fiscal fiscal policy to build roads or improve infrastructure.This has saddled the fed with the only real tool,monetary policy ,to stimulate the economy. Many believe that that has created an asset bubble in stocks,but that has been the only policy option left open.

    1. Les, Low interest rates are a driver of income inequality. One reason neighborhood inequality is increasing is that income inequality is increasing. One reason income inequality is increasing is that the wealthy have enjoyed raging bull markets in bonds and equities thanks to a zero-interest monetary policy. At some point interest rates will go up, stock and bond prices will go down, the wealthy will lose a lot of wealth, and inequality will diminish.

      1. LarrytheG Avatar

        Anyone who has a 401K/IRA has been benefiting also.

        but I find Bacon’s explanation in violation of history…

        these neighborhoods have been around a LONG TIME… 50 years or more!

        and it’s not just Fed govt “projects”… The next time you drive through Richmond on I-95 – take a look at the housing that lines the road .. I-95 went right smack through low-income housing…

        even if this was true – how does it explain the high correlation of bad schools in these neighborhoods?

        1. Larry, you’re not paying attention. I’m not saying that monetary policy created segregation. I’m saying that it has aggravated the inequality of wealth in recent years — at the level of individuals and the level of neighborhoods in which they live.

          1. LarrytheG Avatar

            ” I’m just advocating a return to sound money policies that stop benefiting one set of people (primarily the wealthy) at the expense of another set of people (those who don’t benefit from pumping up the price of stocks and bonds).”

            I’m having a hard time looking from now back to the Civil Rights Era and finding what you saying to be true…

            it’s almost as if you’re willfully ignoring the obvious – that bad educations lead to really bad outcomes… no matter the money policies.

            isn’t this yet another variation that a rising tide lifts all boats?

            the boats that have the uneducated don’t rise…

          2. LarrytheG Avatar

            monetary policy and segregation? well.. how about this – if you have a bad education and you have a very low paying job – do you think you’re going to be living in a segregated neighborhood with a crappy neighborhood school?

  5. Steve Haner Avatar
    Steve Haner

    Et tu, Jimbo? The way to solve inequality is to take away income from the wealthy? You don’t make the poor rich by making the rich poor. And when interest rates rise on CDs and bank accounts, they will likewise rise on business loans and mortgages.

    Education and skills training are the path out, proven over the centuries and yet ignored by far too many these days. These days no skills = lousy pay, if you get a job at all.

    1. I’m not advocating taking money away from anybody — I’m just advocating a return to sound money policies that stop benefiting one set of people (primarily the wealthy) at the expense of another set of people (those who don’t benefit from pumping up the price of stocks and bonds).

      I oppose the redistribution of income — and that includes redistributing income from the poor and middle-class to the rich through monetary policy!

      1. Cville Resident Avatar
        Cville Resident

        I won’t deny that low interest policies tend to injure savers/CD holders. What I would disagree about is the proposition that low interest policies disproportionately aid the wealthy.

        The fact is that most Americans now depend on 401(k)s and IRAs for retirement. They need and benefit from rising equity prices just as much as the wealthy.

        I’d also note that low interest policies disproportionately aid the housing and auto industries, and many working and middle class families have benefited from the turnaround in both of those industries since 2008. And a prime cause for those turnarounds has been low interest rates.

        1. CVille, sounds like you’re a convert to trickle down economics!!

    2. Steve Haner Avatar
      Steve Haner

      I refer back to my Crossing the Rubicon column, bemoaning the rising tuitions at two of the state’s flagship public universities and the retreating taxpayer subsidies for in-state students who qualify. THAT will have more of an impact on income disparity than monetary policy. THAT is a sign we are moving in the wrong direction if you have that Jeffersonian dream of an educated and prosperous yeomanry. Community College at the very least should be dirt cheap (but not free) for everybody, with plenty of financial aid for those who need it.

      High interest rates are good for lenders, bad for borrowers. Inflation is good for borrowers, bad for lenders. We will move off the near-zero interest rates but you are wrong Jim if you think interest rates have harmed the poor.

      1. LarrytheG Avatar

        re: free community college

        we might be quibbling over semantics.

        I’d like to see every kid guaranteed a 2yr occupational certificate if they finish high school with a C average.

        In other words – from the first grade on – the kids know this.

        I’d further require – community service as a way to get more/better education…

        give the kids of low economic circumstances a guaranteed path to a job.

        1. TooManyTaxes Avatar

          Community colleges are today relatively affordable and mainly because they make a concerted effort to control costs. Give them access to taxpayer sand we will see hyper-increases in spending, salaries and tuition. Access to other people’s money is like smoking crystal meth.

          1. LarrytheG Avatar

            This is why I think the money should go as a voucher to the student – not the college.. or the student goes to the college without money – and the College bills the state for completion of the courses.

            we have to stop giving money directly to the colleges…. it does not work.

        2. TooManyTaxes Avatar

          I don’t think it matters whether the money goes directly to the school or to the students. If colleges see more money, they will spend more and raise tuition higher. Schools will become less affordable.

          It’s like Fairfax County Public Schools. For years and years, they claimed high levels of non-teaching staff were critical to educating children and refused cuts even in the face of increasing class sizes. Obama stimulus money was used to save staff (according to FCPS budget people in a meeting I attended), but when that ran out, a new superintendent was hired and the effects of cutbacks in government contracting hit, staff positions were cut. Wow! Taxpayers were right.

          1. LarrytheG Avatar

            I think it matters if they see a block of money no matter anything else verses some level of accountability on a per student basis.

            For instance in K-12 – to get Federal money – you have to certify the qualification of the teachers relative to what they’re teaching.

            The SOQs require a match.

            it’s the discretionary money at College and Fairfax level that is not accountable and grows… it’ s not even delineated much beyond total dollars in the budget.

            For Colleges – I’d tie the money to how many kids of economically disadvantaged that pass and have jobs… they get money for that – no money if not.

  6. Les Schreiber Avatar
    Les Schreiber

    Low interest rates have made the “wealth gap” worse. I just don’t believe that the correlations you posit are as severe as you state. When rates do rise,if it is for the right reason,a stronger economy, the effect on equities will be slight because corporations will be doing well.

  7. Peter Galuszka Avatar
    Peter Galuszka

    This post is like some strange acid flashback

  8. LarrytheG Avatar

    I actually think the phrase “Neighborhood Inequality” connotes a perspective that alludes to the fact that perhaps there are neighborhoods that are not “equal” and that – that’s what the goal should be.

    It sort of fits in with the idea of “mixed-use” .. with “affordable housing”.

    I don’t see this approach as realistic. There are always going to be folks who end in in the lower income strata – for various reasons, some of which might be due to a legacy of institutional discrimination… but others who lack acquirable education/skills, motivation, flaws in how they socialize with others in a team environment, have commitment and values to producing a quality product or service, etc.

    not everyone is capable of doing or willing to do more than flip burgers… or other low effort work.

    but we cannot create a housing utopia where everyone is “equal” in outcomes regardless of one’s ability to achieve … and accomplish

    but then again, none of this should equate to a correlation between low performing schools and low income neighborhoods as it seems to be the case almost universally…

    the one thing that we can do – and should do – is make sure that every child – regardless of their economic, geographic, demographic circumstances get access to a true quality education.

    If we do that – the rest of the economic outcomes will likely be better addressed than any kind of income re-distribution schemes including the ones masquerading as something else – like “affordable housing”.

    Why we cannot focus in on this very real – wrong – and make it a priority to fix – why we argue instead that it’s due to bad teachers, lazy parents and yes.. bad genes, is beyond me.

    It’s like we’re using every excuse we can imagine to justify this massive failure that ends up with huge numbers of young men – in prison.. and others who depend on illegal activities to make a living , until they too get caught and sent off to prison – to emerge a few month and years later as even more locked in to that lifestyle.

    Then we blame them for – one-parent families where mom does not “read” to her kids they can do better in school.

    forget the inequitable neighborhoods.. that’s for socialism… but let’s stop pretending about the schools and the need for education… which is the ultimate economic development strategy.

    1. TooManyTaxes Avatar

      So long as the two major political parties support open borders (for different reasons), no one at the economic bottom will ever make progress.

      1. LarrytheG Avatar

        TMT – I think most Dems would support strict employment requirements because most of the consider the employment of illegals to be essentially a
        kind of slavery.. i.e. “keep quite or you’ll get exposed as an illegal”.

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