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A Study of Two Americas—and How to Bring Them Closer

A new study on race and economic mobility in the United States by economists Raj Chetty and Nathaniel Hendren stresses the role that neighborhoods can play in closing the country’s yawning, race-based opportunity gap. In the blog that follows, David Greenberg, LISC’s new director of Research and Evaluation, unpacks the lessons of the study, and posits how the findings can help guide the work of LISC and its partners going forward.

With this article, we are relaunching our blog series on research that relates to our work and that of the larger community development world. In future blogs, we’ll continue to highlight original LISC research as well as path-breaking studies from the broader field that inform how we can forge resilient and inclusive communities of opportunity across America. 

A powerful new study by Raj Chetty and Nathaniel Hendren shows how neighborhoods help advance or undermine racial equality in America. Past work by the authors had been misconstrued to denigrate the work of community development. But their updated research shows even more clearly the importance of addressing poverty and racism everywhere it lives. 

The paper examines what’s known as intergenerational mobility – whether children grow up to earn more or less than their parents. It’s been called the “American dream,” the notion that the next generation will improve upon the past. But the overall story since World War II has not been a positive one. More than 90 percent of children born in 1940 grew up to earn more than their parents,, whereas a child born in 1985 had about a 50-50 chance of doing better economically. These figures show that the United States has some of the lowest rates of mobility in the developed world.

Chetty and Hendren have previously examined the role of neighborhoods in fostering intergenerational economic mobility, but their past data was blind to the race of the individuals studied. Their new data set allows them to examine the interplay between race and neighborhoods for just about every 35 to 40 year old living in America.

Prior point-in-time measures of racial wealth and income inequality have presented clear images of the impact of racism on economic outcomes. Black households’ median income is currently about 60 percent of white households’, and their median net worth is only 10 percent of that of white households.

Chetty and Hendren’s portrait of how generations fare over time is in many ways more troubling.

According to the new study, only 2.5 percent of African-Americans born in the bottom fifth of the income distribution are likely to reach the top fifth compared to 10 percent of whites born in similar circumstances. There are also extraordinarily high downward rates of mobility in black families. The authors found that African-American children born in the top fifth of income are just as likely to fall to the bottom fifth in adulthood as they are to remain on top. In contrast, white children are five times more likely to remain on top than to fall to the bottom.

The work of community development in both cities and rural areas is intertwined with the struggle for racial justice.

The challenge is especially acute for black men, whose outcomes drive much of the income and mobility gap between racial groups. (Black women do relatively better economically, according to the study.) Among the troubling outcomes the authors reported was one related to the link between income and prison data: the researchers found that one in five black men born to the lowest fifth of earners are incarcerated on any given day.

Three implications of these findings ring out for the community development field. 

First: the study provides further evidence that the work of community development in both cities and rural areas is intertwined with the struggle for racial justice.

In fact, many community development organizations were born out of the battles in the 1960s and 1970s against urban renewal and redlining, and to promote empowerment in communities of color. Many of our rural community partners have similar histories. And while LISC and its partners currently operate in diverse communities, its proven work to combine income and asset-building with financial coaching is a critical strategy to reduce the racial wealth and income gap. Moreover, its work to prevent foreclosures shores up families’ most valuable asset – their home. But LISC, together with the public and corporate sector, needs to do more to counter the extraordinary impact of racism. 

Second: racial disparities can’t be solved simply by moving families of color out of historically disinvested communities into affluent white communities – there is no “magic bullet” for the problem of racism.

Past work by Chetty and Hendren has sometimes been used to attack the community development field, as some have misinterpreted their findings to argue that it is more important to move low-income people of color into richer, whiter suburbs than it is to improve the neighborhoods in which they currently reside.

But according to this latest study, simply moving to a high-income white neighborhood doesn’t, on average, help black children. It’s only when black households in the neighborhood into which they move also do well that African-American children tend to benefit as a result of relocating.

LISC and its partners have always supported the opportunity for people of all races and ethnicities to have a broad spectrum of housing and neighborhood choices, and have demanded the enforcement of fair housing laws. But the fact that there are very few places that support intergenerational mobility for black children means that we need to act everywhere to promote greater parity between races.

Third: neighborhoods matter for achieving the American dream, sometimes more than individual family background.

For black boys, the study showed, having one or two parents living at home was less important than the conditions of the neighborhood. Importantly, these conditions include the degree of white racism in the community (measured by Google searches of racist terms used in the area). And in a finding that echoes the concerns of community sociologists, the success of low-income African-American boys appeared to be influenced less by whether they were living with their own fathers than whether the neighborhood as a whole had more families with black fathers at home.

Race and America’s history of racism explain a lot about why the places children are born and grow up determine too much about their life prospects. The study’s findings show just how important it is to employ strategies that improve both communities and the lives of their residents – all of which drive LISC’s mission and portfolio of work. In re-launching this blog series, we will be sharing what we and our partners learn along the way about how to change this.

David GreenbergABOUT THE AUTHOR

David M. Greenberg, Director of Research & Evaluation
David’s primary research focus is on community development, affordable housing, workforce development and community organizing. Before coming to LISC he was a Senior Associate with MDRC and directed some of the field’s largest community research projects, including studies of neighborhood networks in Chicago and public housing redevelopment and job training initiatives around the country. He holds a Ph.D. in urban and regional planning from MIT, where he received a National Science Foundation fellowship and a dissertation award from HUD. He is also currently a part-time faculty member at The New School’s Milano School of International Affairs, Management, and Urban Policy.