Segregation limits upward mobility
Economists study income inequality
Consider a 3-year-old child growing up in a low-income household in Milwaukee County.
Is it possible that, decades later, the child’s income could be heavily impacted simply by where they grew up? Can geography play a strong role in earning power?
A pair of Harvard economists say yes. They have estimated the causal effects of what each year living in a given county in the U.S. has on a child’s income once they reach adulthood.
For example, each year a child spends in Milwaukee County causes their future household earnings to decline by 0.5%. Each year builds on the next, and when that child turns 26, their household income will be $4,843 per year less than the national average of $35,511.
If that child grows up in Waukesha County, for example, the push would be in the opposite direction. For each year a child from a low-income household spends in Waukesha County, they gain 0.7% in household income at age 26. That adds up to $7,373 per year more than the national average.
The income trajectories were calculated by Harvard economists Raj Chetty and Nathaniel Hendren as part of their ongoing Equality of Opportunity Project.
Their research shows poor children who grow up in counties with less income inequality, less poverty and less segregation will have higher incomes in adulthood, while those who grow up surrounded by inequality and segregation will have lower incomes.
The disparities between the downward pull of Milwaukee County on lowincome children and the upward push of those children in surrounding counties, such as Waukesha and Ozaukee, are some of the largest in the nation.
They’re also a direct challenge to one of America’s most basic ideals: If you work hard, you can get ahead.
“People can agree that everyone should have an opportunity to move up the economic ladder,” said Marc Levine, a University of Wisconsin-Milwaukee history professor and director of UWM’s Center for Economic Development.
“No one would argue that a lack of mobility is justified.”
Segregation and concentrated poverty
Reggie Jackson has seen first-hand how opportunities have faded for lowincome children in Milwaukee. He grew up near the intersection of N. 14th St. and W. Ring St. on the city’s northwest side at a time when manufacturing jobs were plenty, and the city was a hub of employment for African Americans.
“Everybody knew everybody,” he said. “For the most part, it was all the same families.”
Jackson joined the Navy in 1983 and spent the next 10 years serving, then living for a few years in Torrance, Calif. While he was gone, his city underwent a transformation.
“I missed the loss in manufacturing jobs. I missed the drug activity. I missed the crack cocaine stuff,” Jackson said. “When I came back, that stuff was over for the most part.”
After moving back, Jackson worked for eight years as a teacher, some of those in Milwaukee Public Schools.
“When I came back, I saw so many young people who were uncomfortable,” Jackson said. “Some of my students would come to school on Monday hungry because they hadn’t eaten a whole lot over the weekend.”
The decline of manufacturing in Milwaukee lead to chronic unemployment, growing concentrated poverty and racial segregation. Opportunities are harder to come by.
In 1970, as Milwaukee was near its industrial peak, just 17% of the city’s population lived in a neighborhood defined as having concentrated poverty, that is at least 1 in 5 of their neighbors was living in poverty.
By 2016, 65% of the Milwaukee residents lived in a neighborhood with concentrated poverty.
“Urban areas, particularly those with concentrated poverty, generate particularly negative outcome for low-income children,” Chetty and Hendren write.
While their current research does not break down the effects by race, Chetty and Hendren found that areas with larger African-American populations have lower rates of upward mobility.
“Place effects therefore amplify racial inequality: black children have worse economic outcomes because they grow up in worse neighborhoods,” the economists write.
The researchers also found that areas with high concentrations of urban poverty, such as Milwaukee, have particularly negative effects on boys.
For example, future household incomes for low-income boys declines by 0.74% for each year they live in Milwaukee County compared to a decline of 0.47% for girls. If a boy spends 20 years in Milwaukee, that means an annual income nearly 15% lower than the national average at age 26 compared to his peers, according to the research.
Jackson, an education liaison coordinator for a workforce services company, has also spent the past few years studying the history of segregation and poverty in Milwaukee and giving presentations on those topics to community groups, museums and schools in Milwaukee and in the suburbs. He worked as a griot, or storyteller, for America’s Black Holocaust Museum in the city.
He’s seen and felt the impact of segregation on young people of color in Milwaukee.
“We live in different neighborhoods, we worship in different churches, we go to different schools, we shop in different places, we play in different places,” Jackson said.
Environments also matter for the kind of goals children set for themselves, Jackson said. The people around you, their goals become your goals.
“If you have a lot of people in a distressed neighborhood, and there’s not a lot of resources, and the school district is not performing well, then it’s going to be hard to find a pathway out,” said Mark Treskon, a researcher with the Urban Institute in Washington, D.C., who studies economic and community development.
Opportunity depends on access
Chetty and Hendren’s research clearly finds benefits for each year a low-income child spends in a county with lower levels of poverty, segregation and income inequality.
That creates a dilemma, not only for parents, but also community leaders.
“Do you try to improve the neighborhoods people are in? Or, do you try to get them to move to better neighborhoods? Waukesha, for example,” Treskon said. “It gets to pretty fraught discussions about how you do that equitably.”
While the research focused on the effects on mobility at the county level, families wouldn’t necessarily have to leave a county to experience improved opportunity, Treskon said.
“There are going to be parts of the county where the effects of the county are more similar to Waukesha,” he said.
Levine and the team of researchers at the Center for Economic Development at UW-Milwaukee have published a number of studies tracking the economic shifts in Milwaukee and the surrounding counties.
Most of the job growth since the
1990s has taken place in the suburbs, Levine said. At the same time, public transportation that would provide better access to those jobs has decreased.
One study from the center estimated that 30,923 fewer jobs were reachable by public transit in the Milwaukee area in 2014 than in 2001 because of reductions in bus lines.
The idea that the geographic location of where a child grows up can so negatively affect their future earnings could be a motivating factor for community leaders and politicians to act.
One way to do that, Levine suggested, would be to work to increase public transportation to places with high employment.
“The clear implication is to create opportunity,” Levine said of Chetty and Hendren’s work.
Mobility is not a zero-sum game, the research shows. Areas that generate better economic outcomes for children from low-income households also slightly raise (0.3%) the incomes for children from high-income families.
“Everyone is effected by what’s going on in central Milwaukee,” Treskon said. “Understanding how to better take care of people in the region has broader regional
“Urban areas, particularly those with concentrated poverty, generate particularly negative outcome for low-income children.” Raj Chetty and Nathaniel Hendren Harvard economists, in a report for their ongoing Equality of Opportunity Project effects.”
Moving isn’t easy
To estimate the causal effects of a county on a child’s future income, Chetty and Hendren analyzed data from millions of tax returns for children born between 1980 and 1986.
Their work suggests one way low-income families can create opportunity is to move to a county that has better outcomes for their children.
But moving can be difficult for people with limited incomes.
“How do you do that if you’ve never been to Waukesha?” Treskon asked. “You don’t have any social networks out there, you don’t know what jobs are out there. It’s really tough.”
For people of color, there’s an added stress of living in one of the most segregated metro areas in the country. Moving to the suburbs might mean they’re the only African-American family on the block.
Last week, Jackson was at Franklin High School in suburban Milwaukee for a presentation about Black History Month. He talked with some families about how great the schools are. But, they also talked about how in January a student at the school put “white” and “colored” signs over a set of drinking fountains.
Franklin High School administrators are also now investigating the racial taunting of basketball players from Racine by Franklin fans last week.
The stress of racial discrimination is damaging for children and parents. And it’s impossible to ignore when you’re faced with it every day, Jackson said.
Jackson and his wife raised their daughter, now 20, in the Sherman Park neighborhood in Milwaukee. They love it.
“We have great neighbors,” he said. “I know just about everybody on the block on both sides of the street.”
Jackson said he understands that people will look at the differences in economic outcomes for children and perhaps want to move.
“People want better opportunities, obviously,” Jackson said. “But they also want to feel welcome.”
Read the series
To read the Journal Sentinel’s 50Year Ache series, which focuses on where the city stands on key issues five decades after the open housing marches of 1967 and 1968, go to jsonline.com/50year.
The 50-Year Ache project was produced by the Journal Sentinel news staff with no influence from fellowship, event or advertising supporters.