Unpacking Neighborhood Level Economic Segregation

Urban economic segregation and rising income inequality across the nation are widening the opportunity gap and making it more difficult for poor and low-income youth to access a quality education and work their way out of poverty. Social and economic mobility are celebrated tenets of the American dream, but policy solutions tend to focus on national and state-wide approaches rather than local advances. Visualized data will help planners better understand urban economic segregation in their cities and identify the areas that experience the greatest need.

Social Mobility? It’s About Location, Location, Location

According to research conducted by Harvard’s Equality of Opportunity Project, where a child in poverty grows up directly affects the likelihood that the child will be able to rise out of poverty. The study tracked the anonymous earnings of millions of Americans in order to explore how likely a child raised on the bottom fifth of the income ladder was able to rise to the top fifth of that ladder over the course of their lifetime. The 2013 study was one of the first studies proving that the economic layout of a metropolitan area affected mobility alongside commonly understood factors such as education. The economists found that upward mobility varies even in cities with similar income distributions, like Seattle and Atlanta.

According to this map, people climb the income ladder less frequently in the Deep South and in the Midwestern Rust Belt states. Children who grow up on the Great Plains, the Northeast, and the West enjoy much better chances of upward mobility. Things look particularly promising for children who grow up in poverty in North Dakota, which weathered the Great Recession exceptionally well due to its abundance of oil.

Why does place matter so much? Neighborhood segregation.

In our cities today, race and income segregation tends to overlap with many other place-based inequalities — poverty, unemployment, crime, and housing quality and overcrowding. Before the rise of income segregation, neighborhoods hosted a mixture of incomes. Poor families living in relatively wealthy neighborhoods were able to afford housing while also sending their kids to highly resourced schools. During the Great Recession, poor neighborhoods only got poorer.

According to Dr. David Grusky who studies income inequality at Stanford, as the poor tend to live primarily with the poor and the rich tend to live with the rich, school funding has become concentrated to benefit wealthy children most. This widens the opportunity gap by allowing less support and fewer resources for poor children to improve their educational outcomes, graduate high school, and consider attending college.

How can we understand this issue within our cities?

In order to truly understand (or begin to understand) economic segregation at the city and neighborhood levels, we need to be able to answer:

• Does economic segregation exist in this community?
• If so, where are low-income and poor residents concentrated?
• What are the primary economic burdens and opportunities in this community?
• Does economic segregation affect school proficiency across the city?

Answering these questions means that city planners and decision makers can identify areas in need, focus on problems specific to those places, and align policies and initiatives with what the residents in that community really need. Since the challenges accompanying urban, suburban, and rural poverty vary, visualized data further empowers planners to fully understand the nature of the poverty in their own community or project area.

Does economic segregation exist in this community?

Identifying segregation requires the help of visualized data. Cities that struggle with economic segregation will notice a moderate to high Gini coefficient (measure of income inequality) for the city overall and lower Gini coefficients in the neighborhoods that qualify as low or high median income areas.

Like the rest of the South, Memphis youth who grow up in poverty struggle to rise to greater wealth. Of Memphis children whose parents earn at or below the federal poverty level, only 16 percent are likely to be considered middle-class (defined by the Pew Research Center as a median household income between $41,869 to $125,608 annually) and only 10 percent will break into the upper-income bracket (a median household income of over $125,608 annually) by age 30. The remaining 74 percent can expect to be ‘low-income’ or live in poverty, earning below $41,869 and $24,300 for a family of four respectively.

Income Inequality and Median Income for the City of Memphis, Tenn.

Income Inequality for Memphis vs. Neighboring Towns
This map is a bivariate representation of income inequality and median household income in Memphis. As a whole, Memphis has a relatively high level of income inequality and relatively low median household income.

Income Inequality in Memphis
The next map provides a breakdown of income inequality in Memphis. Low-income neighborhoods in pale green have very low-levels of income inequality, indicating that those neighborhoods are economically homogeneous–meaning most residents are in the same income bracket. These are neighborhoods where most residents are low-income and are at risk for missing out on opportunities for social mobility.

Segregation in Central Memphis
A closer look at income inequality is provided in this map highlighting Central Memphis. While Memphis as a whole has a relatively high rate of income inequality, some lower-income Memphis neighborhoods (as shown in light green) lack variations in income

Where are low-income and poor residents concentrated?

Visualizing income to poverty-ratio data in neighborhoods identifies low-income areas with high levels of poverty. Low-income households are considered to be at or above 200 percent of the poverty line, whereas poor households are at or below 100 percent of the the poverty level.

Below is the income to poverty ratio for zip code 38106 which includes the neighborhoods of Victor-Kerr, Trigg, and Bunker Hill in Memphis. The Gini Index score of 0.408 indicates income inequality, but cannot help make sense of the distribution of that inequality. The median household income for this zip code is $22,707. Ultimately, the income to poverty ratio chart is the missing piece that helps us understand what that relative amount of income inequality means.

Note that in the Victor-Kerr, Trigg, and Bunker Hill neighborhoods, nearly 38 percent of residents are below the poverty line, 12 percent are at or only slightly above the poverty line, and 30 percent of residents are at least 200% above the poverty line, which is what constitutes being low-income.

Measures like this bring essential nuance to economic segregation. A high level of income inequality in a neighborhood might mean the neighborhood has a mixture of poor and low-income residents, indicating that it is still at-risk.

If neighborhoods are relatively economically homogeneous, but the city as a whole is heterogeneous, the city suffers from economic segregation.

What are the primary economic burdens and opportunities in this community?

Data on the prevalence of poverty-wage work, the education and skill level of the labor pool, and the state of the job market in a community can help make sense of economic opportunities for low-income and impoverished residents in Memphis.

Mapping out the proportion of the working poor — residents living in poverty who worked full-time in the past year — alongside the Labor Market Engagement Index provides a high-level overview of economic opportunities in any neighborhood. The Labor Market Engagement Index provides a summary description of the relative intensity of labor market engagement and human capital in a neighborhood. This is based upon the level of employment, labor force participation, and educational attainment in a census block group.

In areas where jobs are accessible, but wages are too low to bring people out of poverty, it is important to raise the education level in order to shift some workers towards higher-wage work. Reducing the competition of low-skilled jobs will raise their wages for low-skill occupations over time and increase labor market engagement.

The map below displays where the proportion of residents who have worked full-time in the past year with income below the poverty level (green) and the Labor Market Engagement Index (pink) which helps measure the intensity of labor market engagement in a given census tract. The charts display the income to poverty ratio and the predominant employment industries. Fascinatingly, most census tracts are either starkly green or pink, indicating that census tracts where people have worked full time while still remaining below the poverty level are also areas with a dysfunctional labor market.

Worked Full-Time Past Year and Income Below Poverty Level in Memphis

What do the educational opportunities in these neighborhoods look like?

While jobs data may feel like the most important measure of the state of an economy right now, educational opportunities are key to reducing poverty and income inequality over time.

To learn more about educational opportunities in a neighborhood, it is helpful to examine measures of school proficiency alongside median household income. This helps identify large-gaps between school quality in wealthy or poor neighborhoods. Public and private school enrollment by grade indicate how many kids are impacted by the public school system and how many families opt out of that system for whatever reason. To get a serious look into the future, check out the percent change in preschool enrollment. Preschool enrollment matters because early childhood education is predictive of long-term academic success.

The School Proficiency Index Score for the City of Memphis is 25 out of a possible 100. At the census tract level within Memphis, the School Proficiency Index ranges from 0 to 98, with most at the bottom of the spectrum between 4 and 34.

School Proficiency Index in Memphis

Data also shows that, unfortunately, school proficiency and median household income are highly correlated, with lower-income areas attending less proficient schools. Enrollment in Memphis Public Schools is much higher than private school enrollment, suggesting that most students will depend upon the improvement of these public schools

School Proficiency Index and Median Household Income in Memphis

Addressing Inequalities in Income, Opportunity, or Education

Poverty reduction is a long-term effort. One of the greatest barriers to the public acceptance, implementation, and sustainability of poverty intervention policies is that results are never immediately seen.

Great policies, even those guaranteed to work, need several years to demonstrate their impact since they usually aim to improve access to opportunities for youth enrolling in school.

Poverty research focuses on national and statewide educational interventions. Neighborhood homogeneity is acknowledged as a growing cause of the opportunity gap, but there is more debate on housing approaches to this problem than there is on educational policy reforms.

For planners, an example to a strong approach might be to alter zoning codes to require that mixed-incomes housing development be included in each neighborhood above the poverty-line. Measures like this are sometimes opposed because people are concerned about increasing access to opportunities for a few, but not the whole poor community. However, the benefits are widespread. As low-income residents move up the income ladder, the competition of poverty-wage jobs decreases and those wages rise over time.

Many different policy interventions have been proven to mitigate poverty, but since results take time it is important to set realistic public expectations about the short-term upshot of these programs.

There isn’t a clear one-size fits all solution for cities, but understanding the problem through data can be straightforward, which is why cities need to share their expertise and experiences to tailoring their own approach.

Progress Starts with your Community

Data alone can’t tell you how to end poverty in your city or provide the silver bullet that will bring income diversity back into your neighborhoods once and for all. However, it can help you identify the areas of greatest need and target your efforts efficiently. From a planning perspective, developing mixed-income housing is a fantastic approach to closing the opportunity gap. What will work best in your community has a lot to do with its political culture, your resources, and the way that poverty manifests there. Taking advantage of visualized data can empower planners to understand whether income segregation is a problem in their cities and begin addressing this cause of a systematic opportunity gap at the root.

To identify areas in your community that are suffering from income inequality, request an interactive local analysis here.

About the Author: Michelle Stockwell is a senior Politics major at Hendrix College.

We aren’t policy scholars, sociologists, or economists, but this article was inspired by the best of them. Here are a few places to help you get started when you’re ready to pick an approach to solving your problem.

Brookings Institute Research on Social Mobility
Brookings Institute Research on Suburban Poverty
The Stanford Center on Poverty and Inequality