Regional Disparity: Is the “American Dream” Dead?

August 14, 2013 by MPA@UNC Staff

When it comes to the future of our children, Americans are less than optimistic. Polls show that we are no longer confident the next generation will achieve a higher standard of living than the one before it, as has historically been the case.

Is “The American Dream” dead? Is the idealism that spurred our parents and their parents before them a lost cause? A new study — dubbed “the most detailed portrait yet of income mobility in the United States” by The New York Times — proves otherwise. The study shows that a person’s odds of getting ahead in life may have as much to do with geography as with hard work and opportunity.

Researchers from Harvard and the University of California Berkeley set out to learn whether local tax expenditures promoted intergenerational mobility and helped children climb out of poverty. They used millions of anonymous earnings records to track people over their lifetime, measuring their childhood family income against the income level they achieved as adults.

The project’s findings are telling. While they show a correlation between larger tax credits for the lowest income brackets and higher income mobility, the results revealed something much more striking: Where you grow up has a significant impact on your ability to rise out of poverty. If you’re a child being raised in a low-income home in Atlanta, for example, your chance of joining the top five percent of U.S. earners by your 30th birthday is only four percent. In contrast, if you’re a poor child growing up in Seattle, your chance is about 10.4 percent.

The authors of the study found that cities in the Northeast, Great Plains, and West have some of the highest rates of income mobility, including Boston, Pittsburgh, and New York. But children from lower-income families in the Southeast and the industrial Midwest—including Atlanta, Indianapolis, and Memphis—face a more dismal outlook when it comes to rising above the station of their birth. Not surprisingly, the study found that geography was much less of a factor for children who were already affluent. Also, children who moved from a low-mobility region to a high-mobility region at a young age achieved income levels almost as strong as those who were born in higher-mobility areas.

It’s tempting to explain regional disparities with the fact that some areas simply have higher average incomes. However, the study found that upward mobility rates differ sharply in areas of comparable income levels, such as Seattle and Atlanta.

Why is it harder for some low-income people to climb the social and economic ladder and easier for others?

The answer is complicated. Some of the main traits shared by higher-mobility areas include a large and geographically dispersed middle class, a higher occurrence of two-parent households, better than average schools, and a large proportion of residents who are involved with religious and community groups.

Income diversity appears to be another factor in social mobility. In upwardly mobile cities, the lower class is integrated among the middle and upper classes. This is in stark contrast to regions with higher racial and economic segregation. When the population is structured this way, low-income people are isolated, with little access to well-paying job opportunities. For example, Atlanta is one of the nation’s most affluent cities, yet it is also one of the most segregated by income.

It’s important to remember that the data from this study are correlational, and no definitive conclusions can be drawn. However, its findings should give officials in the public sector plenty of pause. What can be done at the systemic level to stop these regional income disparities from intensifying? What kinds of policies and services can help level the playing field of opportunity for all Americans? Public service professionals can gain insights from this research as they look to affect change in their communities.