Growing Income Gap Segregates More Neighborhoods
Life + Money

Growing Income Gap Segregates More Neighborhoods

iStockphoto/The Fiscal Times

Rising income inequality has led to an increasing number of Americans clustering in neighborhoods in which most residents are like them, either similarly affluent or similarly low-income, according to a new study detailing the rising isolation of the richest and the poorest.

A report released Wednesday by the Pew Research Center said the percentage of upper-income households situated in affluent neighborhoods doubled between 1980 and 2010, rising to 18 percent. In the same time frame, the share of lower-income households located in mostly poorer neighborhoods rose from 18 percent to 23 percent. Neighborhoods that are predominantly middle class or home to a wider mix of income levels shrank.

“The country has increasingly sorted itself into areas where people are surrounded by more of their own kind, if you will,” said Paul Taylor, the Pew Center director and co-author of the report, adding that the majority of neighborhoods in the country are still mostly middle class or mixed.

The Pew study is the latest of several scholarly analyses of census data showing the impact of a slow and steady squeezing of the middle class, which in turn has swelled the two extremes. Because of a lag in the way census data is tabulated, the full impact of the recession that started at the end of 2007 will not become clear for several years.

What sociologists call segregation by income at the neighborhood level has been underway for decades, but the most recent census data suggests the pace picked up between 2000 and 2010.

Pew found the trend most pronounced in the Southwest. The top three cities with the most income segregation in the country are all in Texas — San Antonio, Houston and Dallas. The study attributed that to an influx of, at one end, low-skilled and low-wage workers from Mexico and Central America, and at the other end, high-skilled workers and well-to-do retirees.

The Washington region experienced a small rise in neighborhoods that can be characterized as mostly well-off or mostly low-income. Among the 30 largest metropolitan areas in the Pew study, Washington falls smack in the middle, placing it slightly above the national average.

Under Pew’s calculations, the share of upper-income Washington-area households — those with incomes of $171,000 or more — living in majority upper-income neighborhoods increased to 15 percent from 13 percent over three decades. At the other end, the share of households with incomes below $57,000 and living in lower-income neighborhoods rose to 32 percent from 31 percent.

Both Pew and a study done by two Stanford University sociologists last year say the biggest factor behind the growing residential isolation is a rise in income inequality. The Stanford study said the share of families living in middle income neighborhoods has dropped over four decades from almost two-thirds to less than half.

Many other factors also are at play.

William F. Frey, a demographer with the Brookings Institution, sees a generational divide at work, particularly in big cities. The baby boom generation bought houses in neighborhoods where their children are now priced out.

“Younger people are still struggling to just buy a home, and the kind of neighborhoods where they end up are not nearly as nice,” he said. “Age isn’t a part of this study, but it underlies it.”

Frey said the type of developments that have fueled growth in suburbs and exurbs also have exacerbated the income isolation. “They are where the McMansions were built,” he said. “As a result, these are areas segregated among the upper income.”

Sean Reardon, a Stanford University sociologist who found a similar trend going back four decades, said restrictions on lot size limited the building of cheaper houses and apartment buildings in many new developments. Simultaneously, he said, a lot of high density, low-income housing has been torn down and replaced by low-density housing scattered throughout cities.

Thomas Anderson, president of Washington Fine Properties who has been selling real estate for more than 30 years in both New York and the Washington area, said the high price of housing has added a new element to many buyers’ lists of must-haves. Many more now want to be sure their neighbors have the financial wherewithal to maintain their properties and not have to enter into short sales, he said.

“The price of real estate is so high that people are concerned about their investment,” he said. “It’s counterproductive to work hard to invest in a home that’s going to be negatively affected by a short sale.”

The rising phenomenon of segregation by income — at a time when segregation by race is on the decline — may have implications for communities and politics.

Reardon said a neighborhood that lacks socioeconomic diversity could lessen support for taxes to fund schools, parks and social services in other neighborhoods.

“If people with most of the money and wealth live separately from everyone else, there’s going to be less investment in the neighborhoods where the middle class and the poor live,” he said.

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