At this point, broad agreement has existed for years that inequality is one of America’s most pressing issues. And yet it appears that very little progress has been made in tackling the problem.
That may explain the appetite for stories purporting to rank cities around the country by their level of “inequality,” allowing readers to shake their heads at the excess of places such as New York City (which, by virtue of the large number of extremely high earners, usually scores quite poorly), and take a closer look at relatively egalitarian cities, hoping that they might have something to teach.
But unfortunately, the wonk’s axiom that “extreme cases make bad policy” is true more often than not. For one, these rankings often use a sub-regional lens, picking out “egalitarian” suburbs that earn their title by banishing all affordable housing—and the low-income people who need it—to other parts of the metropolitan area. Even where an entire region has relatively low levels of inequality, drawing lessons that are applicable to other cities can be extremely challenging.
Take, for example, the case of Ogden, Utah. Two recent articles—a summer story in the Los Angeles Times and a recent Newsweek cover story—have suggested that the city has worked out the recipe for equitable development.
The premise of both of these stories is that as measured by the Gini coefficient—the most common way to measure income inequality—the Ogden-Clearwater metropolitan area is the least unequal in the country. But what does that actually mean for everyone else? There’s actually both more and less to the story than meets the eye.
Ogden has several unique characteristics. First, it’s very much in the economic orbit of the considerably larger Salt Lake City metropolitan area; until 2000, the Census actually considered it a part of the Salt Lake City region. In some respects, then, Ogden resembles a large, somewhat distant suburb of Salt Lake.
And like many metropolitan areas, very high income and very low income households are somewhat more likely to be found in the urban center—in this case, Salt Lake City rather than Ogden. Just as many of the suburbs of metropolitan areas have “less inequality” than large urban cities, it shouldn’t be any surprise that Ogden has lower levels of inequality than Salt Lake City. As Daniel Hertz pointed out in a post at City Observatory, high marks for equality may actually be a symptom of exclusiveness rather than equality: Cities that exclude poor people frequently have higher measured equality than do more inclusive cities.
Ogden’s economy is also highly distinctive. Two of the largest employers are arms of the federal government: Hill Air Force Base and the Internal Revenue Service. While neither pays particularly high wages, federal jobs account for an unusually large amount of jobs and income in Ogden. More than 15 cents of every dollar of income come from federal payrolls, which is more than five times greater than the typical large or midsize American metro area, and higher than every urban region in the country besides Huntsville, Alabama, and Washington, DC.
Also, cities in Utah (and many other Mountain West states) have higher rates of intergenerational economic mobility than the U.S. as a whole. According to the landmark Equality of Opportunity study conducted by Raj Chetty and his colleagues, kids growing up in poor households there have measurably better chances of moving up in the income distribution as adults than the typical American.
That makes it seem somewhat less likely that Ogden’s recent economic and community developments are fostering its low levels of inequality, a lesson the Newsweek article tries to draw. There’s little evidence that Ogden’s equality is the product of any recent policies or programs. The Chetty study measured the intergenerational mobility of kids who grew up in Ogden in the 1980s and ‘90s—at a time when Newsweek says the economy and community were struggling. And even in 1999, Ogden—then combined with Salt Lake City for federal statistical purposes—had one of the nation’s lowest levels of measured inequality. And as we’ve noted, the same pattern holds for many other communities in the broader Mountain West.
Rather, Chetty’s study suggests that high intergenerational mobility is strongly correlated with things such as intact families, strong schools, limited sprawl, and low levels of racial, ethnic, and economic segregation—characteristics that tend to be more deep-seated and slow-changing than economic development programs.
So what are the real lessons Ogden offers about reversing the growing tide of inequality in the U.S.?
First, it really helps to have a strong source of good, or at least middle-wage, jobs. While those have been increasingly hard to find in the private sector, a substantial government employment presence—such as a big military base or extensive administrative offices—will probably encourage a bit more income equality. Whether that’s a recipe for other communities or the nation isn’t clear: Quintupling the number of federal jobs in every metropolitan area doesn’t seem to be on anyone’s political agenda. Being one of the fortunate few cities with a large concentration of government employment isn’t a scaleable solution to inequality.
Second, while some smaller metros on the periphery of a big city do well on the inequality statistics, many of the problems of inequality end up being outsourced to cities. Suburbs, especially exclusionary ones, tend to ban the kinds of affordable housing construction that enable poor people to live in a community. Cities offer a bigger base of job opportunities, more affordable transportation (including workable public-transit systems) and often have better social-support networks. Cities also attract high-income households. Big city centers have more inequality, but it’s because they facilitate diversity and inclusion—not because they generate inequities.
While it may show up differently in different locales, the roots of the nation’s inequality problem are national and not merely the sum of local inequalities. The diminished value of the minimum wage, the falling clout of unions to raise wages, the growth of global competition, a tax code that favors the accumulation of wealth and returns in a range of industries have all caused inequality to increase nationally. These challenges are largely beyond the power of cities to address.
What cities can do, through local policy, is work to assure an adequate housing supply, so that economic growth doesn’t needlessly push up housing prices. By providing for a range of housing types and investing in the civic realm, cities can help promote economically integrated communities that are associated with widely shared opportunity.
Ironically, as has been pointed out at City Observatory, those places with a low measured level of equality may be the ones that are the most diverse and inclusive, providing both attractive places for talented higher-income workers to live and invest, and also providing access to housing and job opportunities for those at the bottom of the income scale.
This post appears courtesy of City Observatory.
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