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No Middle Ground - America’s Growing Income Segregation

June 01, 2012

Kendra Bischoff and Sean F. Reardon

Infographic by Ira F. Cummings

It’s no surprise that Americans spend a large share of their incomes to live in the best neighborhoods they can afford. And increasingly our neighbors’ bank accounts are looking more and more like our own.

In 1970 two-thirds of families lived in middle-income neighborhoods; by 2008 only 43 percent of families lived in such neighborhoods. At the same time, the percentage of families who lived in predominantly poor or predominantly affluent neighborhoods increased by more than 60 percent. By 2008 nearly one in three families in U.S. metropolitan areas lived in neighborhoods at the extremes of the local income spectrum.

There are many factors that contribute to income segregation, including housing policies, development patterns in the exurbs, and the structure of municipal boundaries in metropolitan areas. But much of the increase in residential income segregation can be attributed to the rapid growth in income inequality in the United States since 1970. As incomes have diverged, neighborhoods have grown more homogeneous. Not only do the rich have more resources than they did 40 years ago, they are far more likely to live in neighborhoods inhabited exclusively by high-income neighbors. The same is true of the poor, who are now much more likely than they were in 1970 to live in neighborhoods where the majority of their neighbors are poor.

There is reason to be concerned about the growing separation of the rich and poor. The increasingly unequal distribution of income across neighborhoods may lead to unequal access to well-funded public resources, such as schools and parks, and to unequal exposure to social and environmental hazards, such as crime and pollution. In addition to the effect segregation may have on the distribution of tangible resources, the increasing physical separation of affluent and poor families leads to less interaction between people of different socioeconomic circumstances. As the rich have less contact with the poor and middle class, their willingness to invest in shared public resources or to support equality-generating social policies may decline. Perhaps most troubling is the possibility that these residential patterns are producing a nation of two societies, parallel and unequal, in which both adults and children have only a limited understanding of the complex nature of our country’s social fabric.

CEPA Publications

In this chapter I examine whether and how the relationship between family socioeconomic characteristics and academic achievement has changed during the last fifty years. In particular, I investigate the extent to which the rising income inequality of the last four decades has been paralleled by a similar increase in the income achievement gradient. As the income gap between high- and low-income families has widened, has the achievement gap between children in high- and low-income families also widened?

The answer, in brief, is yes. The achievement gap between children from high- and low-income families is roughly 30 to 40 percent larger among children born in 2001 than among those born twenty-five years earlier. In fact, it appears that the income achievement gap has been growing for at least fifty years, though the data are less certain for cohorts of children born before 1970. In this chapter, I describe and discuss these trends in some detail. In addition to the key finding that the income achievement gap appears to have widened substantially, there are a number of other important findings.

First, the income achievement gap (defined here as the average achievement difference between a child from a family at the 90th percentile of the family income distribution and a child from a family at the 10th percentile) is now nearly twice as large as the black-white achievement gap. Fifty years ago, in contrast, the black-white gap was one and a half to two times as large as the income gap. Second, as Greg Duncan and Katherine Magnuson note in chapter 3 of this volume, the income achievement gap is large when children enter kindergarten and does not appear to grow (or narrow) appreciably as children progress through school. Third, although rising income inequality may play a role in the growing income achievement gap, it does not appear to be the dominant factor. The gap appears to have grown at least partly because of an increase in the association between family income and children's academic achievement for families above the median income level: a given difference in family incomes now corresponds to a 30 to 60 percent larger difference in achievement than it did for children born in the 1970s. Moreover, evidence from other studies suggests that this may be in part a result of increasing parental investment in children's cognitive development. Finally, the growing income achievement gap does not appear to be a result of a growing achievement gap between children with highly and less-educated parents. Indeed, the relationship between parental education and children's achievement has remained relatively stable during the last fifty years, whereas the relationship between income and achievement has grown sharply. Family income is now nearly as strong as parental education in predicting children's achievement.

This chapter is now published in the book Whither Opportunity: