Friday, October 19, 2018

Left Behind

Job growth has long been seen as a likely cure for poverty. But new research suggests that poor Americans are frequently left behind even when their cities or communities benefit from hiring booms.

When such cities as Atlanta and Charlotte enjoyed a job surge in the 20 years that began in 1990, for example, the job gains mostly bypassed residents — often African-American — who had been born into poverty.

That is among the findings of a study led by Raj Chetty, a Harvard economist whose newly launched Opportunity Atlas found no association between job growth and economic mobility for poor residents of the affected areas.

“Job growth is not sufficient by itself to create upward mobility,” Chetty said. “It’s almost as though racial disparities have been amplified by job growth.”

His finding challenges much of the conventional thinking, of government officials, business executives and economists, that job gains are the surest way to lift up people in impoverished communities.

Chetty and his colleagues found that economic mobility hinges more frequently on other factors. A person’s race, for example, plays a pivotal role. Economic mobility varied widely among people of different races who lived in the same neighborhoods in Los Angeles or Houston, among other places.

Additionally, living in neighborhoods with many two-parent families improves the likelihood of emerging from poverty— even when someone was raised by a single parent. Mobility is often greater for children who come from neighborhoods with higher-priced housing. And it’s generally better when a high proportion of adults in a neighborhood are working, according to the analysis by Chetty; economists Nathaniel Hendren of Harvard and John Friedman of Brown University; and researchers Sonya Porter and Maggie Jones of the Census Bureau.

“It has been a surprising finding,” Hendren said. “Places that have a lot of job growth don’t tend to be places that are better to grow up in.”

In the two decades that ended in 2010, the Atlanta and Charlotte areas were flooded with jobs. Yet many of those positions appear to have skipped over the residents who were born in those cities’ poorer neighborhoods. The jobs were instead filled by college graduates who had moved to the South. At the same time, mobility worsened in neighborhoods with a high concentration of African-Americans.

Disparities exist not just among metro areas but also among neighborhoods within the same city. In Baltimore, the “Old Town” neighborhood near Johns Hopkins Hospital is a mecca of entrepreneurship. The number of jobs there surged 21 percent between 2004 and 2013, compared with job growth of just 3.4 percent nationally. Nearly 15,000 people work in the area because of the hospital, and 60 percent of the companies are younger than 4 years old, according to government data compiled by the Baltimore Neighborhood Indicators Alliance.

Yet the neighborhood is marked by abandoned storefronts, public housing and a 93 percent non-white population. More than half its residents live in poverty. Ninety percent of the children are raised by single parents. And the Opportunity Atlas shows that a low-income child from that neighborhood is likely to become even poorer as an adult.

Connecting its residents with employers has proved problematic, as it has in poor communities across the country. The disparity between residents and workers in the neighborhood suggests that the jobs have gone to people who either live in other, more prosperous neighborhoods or who commute from the surrounding suburbs.

The discovery that job growth is no panacea for impoverished neighborhoods adds a new complication to economic policy.

Recent data suggests that Americans who can afford to do so are increasingly clustering in the most prosperous parts of the country. Since the financial meltdown a decade ago and the recovery that followed, people with college degrees have increasingly settled in the wealthiest 20 percent of ZIP codes. These areas have enjoyed the most job growth and have accounted for almost all new business formation, according to a new report by the Economic Innovation Group, a policy and advocacy organization. By contrast, in the most financially distressed 20 percent of ZIP codes, populations have dwindled, and there has been almost no recovery from the recession that officially ended more than nine years ago.

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