Schafer: What makes a region an incubator of prosperity?

  • Article by: LEE SCHAFER , Star Tribune
  • Updated: January 28, 2014 - 9:41 PM

A major new study of income mobility nationwide asks, “Where is the land of opportunity?”

One great answer is the area around Marshall in southwestern Minnesota.

The rate at which kids born there move from the bottom 20 percent of household income into the top 20 percent is about 18.4 percent, and it’s nearly that high nearby around Worthington and Redwood Falls.

The study was led by economists from Harvard University and the University of California, Berkeley. While their work doesn’t mention the town of Marshall by name, they provided a link to a color-coded map created by the New York Times from their work that has all of the 741 commuting zones they tracked.

The big map tells a strikingly depressing story, with income mobility particularly low throughout much of the old South and not that much better in parts of the industrial Midwest and in many big metro areas. The chance of getting from the bottom fifth to the top fifth is only 5.6 percent in greater Milwaukee and 4.5 percent in Macon, Ga.

This kind of finding on income mobility would be interesting most weeks, but it’s particularly so now. Income mobility and income equality together have become the hottest issue in economics and politics, from President Obama’s take this week in his State of the Union message down to Metropolitan Council Chairwoman Susan Haigh’s Monday talk on the state of our region.

It’s not just timeliness that made this big new study particularly interesting. After looking at the records of millions of Americans, the research team has come up with a convincing conclusion that helps us understand big differences in economic opportunity.

It’s about community, and where you grow up really does matter.

The authors put America as the land of opportunity this way: “The U.S. is better described as a collection of societies, some of which are ‘lands of opportunity’ with high rates of mobility across generations, and others in which few children escape poverty.”

The authors of the study came up with some factors that help explain the differences in economic opportunity for kids who grew up in different parts of the country.

Housing segregation turned out to be one of them. It has an effect on everybody’s ability to rise up the income ladder in that broader community, the authors say. They also found that sprawl is a factor that holds back opportunity.

The authors also found evidence of the so-called Great Gatsby curve, a term coined in 2012 for a chart that shows the relationship between greater levels of income inequality and greater income immobility.

They called one of the things they observed in high-mobility communities “social capital,” meaning a lot of adults working together in voluntary organizations like churches and community organizations.

Then there are good schools. They found that places with higher test scores, lower dropout rates and smaller class sizes produce kids who have a better chance of moving up economically. In addition, areas with higher local tax rates, which presumably help fund public education, also have relatively higher rates of kids moving into higher income brackets.

But of all the factors they cite, “the strongest and most robust predictor is the fraction of children with single parents,” with areas with low income mobility showing a great deal of single-parent households. Again, it’s not just whether the child grew up with only a mom in the house, it’s the rate of single parenthood at the community level that’s linked to a kid’s economic future.

There’s no reason to think that the factors the authors cite in their findings for the country are any different for communities in southwestern Minnesota, although the data aren’t so readily accessible that they can be easily confirmed.

It feels like a reach to simply explain that Lincoln County just west of Marshall has only 15 percent of its kids living in single-parent households compared with about 36 percent in Ramsey County.

Minnesota state demographer Susan Brower could only speculate as to how some southwestern Minnesota counties ended up with higher relative rates of income mobility in the study, but did note that the study is based upon where a kid is at age 16, not where they end up in a career.

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