Not only has income inequality been growing for decades, but segregation among families by income has been on the rise at the same time. A new study by Kendra Bischoff and Sean F. Reardon published by the Russell Sage Foundation shows that over the last 40 years, “sorting” by income has increased so rapidly that Americans are much more likely to be clustered in either low-income neighborhoods or high-income ones, rather than living in middle class areas.
The authors document “a steady decline in the proportion of families living in middle-income neighborhoods from 1970-2009″ that was matched by an increase in families living “at the extremes of the neighborhood income distribution.” Overall income segregation grew by about 29 percent over those 40 years.
As they note, 65 percent of families lived in middle-income areas in 1970 and only 15 percent lived in the extremes of concentrated poverty or wealth. Now a third of families live in those extremes and only 42 percent live in middle class neighborhoods. In fact, the portion of families who live in very affluent areas doubled, as did those living in high-poverty areas.
The trend has been even more exacerbated among black and Hispanic families. Black families experienced less income segregation than white ones in 1970, but now it is 65 percent greater among black families. Similar trends happened for Hispanic families, although not quite as quickly.
“In short, racial segregation coupled with income segregation means that low-income black and Hispanic families will tend to cluster in communities that are disadvantaged along a number of dimensions, such as average educational attainment, family structure, and unemployment,” the authors write. “In contrast, low-income white families, although affected by income segregation as well, tend to live in neighborhoods with higher average incomes than even middle-class black and Hispanic families.”
The authors find that the growth in segregation is correlated with growing income inequality and is also more pronounced in larger metropolitan areas. The authors note, “We find that segregation has grown most rapidly in metropolitan areas characterized by growing income inequality, growing proportions of children, and increasing average educational attainment levels.”
This income segregation can have negative consequences. The authors point to studies in sociology that show that concentrated poverty can affect a person’s “social, economic, educational, and/or physical outcomes.” It could also lead to inequality in school funding and for other public resources.
In fact, a recent report found that economic mobility — or children’s chances of rising into a higher class than their parents — depends heavily on where someone grows up. Further analysis from the Center for American progress found that regions in the country that have a stronger middle class also have higher economic mobility. Yet it’s clear that those areas are on the decline.
Meanwhile, income inequality continues to grow rapidly. Over the past three years, the top five percent of households saw income grow by more than five percent, but everyone else actually saw it decline. The wealthiest Americans took home the largest share of national income ever recorded in 2012. At the same time, the middle class has been shrinking, with incomes declining over the past decade.