Some US cities now have worse inequality than Mexico, a study has shown

Skid Row, Los Angeles. Image: Getty.

The cities of the Americas are unequal places. US census data and recent American Community Surveys show that in most modern American metropolises, resources are unevenly distributed across the city – think New York City’s lower Manhattan versus the South Bronx – with residents enjoying unequal access to jobs, transportation and public space.

In 2014, New York City’s GINI inequality index was 0.48, meaning that income distribution was less even in New York City than in the US as a whole (0.39). It was also higher than the most unequal OECD countries, Chile (0.46) and Mexico (0.45).

Latin America, which is the world’s most unequal place, is also by far the most urbanised region of the globe. More than 80 per cent of its population lives in large cities. Between 1950 and 2005, the region’s big cities grew precipitously. Both Mexico City and São Paulo jumped from just under three million people to, in both cases, nearly 19m.

Data on urban inequality is largely unavailable, but it is clear that this rapid urbanisation has been far from equitable. According to a 2012 UN Habitat report, the large majority of Latin America’s non-poor population lives in major metro areas, while the poorest live in rural areas.

What does inequality look like?

No matter where you live, measuring inequality is tricky, because its incidence and extent changes in different parts of the city.

Sure, there are rich neighbourhoods and poor ones: high-income and low-income households sort themselves across cities according to preference (for local public goods and neighbourhood composition) and needs (according to budget, job location and housing prices).

But not every neighbourhood is comprised fully of households with the same income. Income sorting across space is often “imperfect”, meaning that rich and poor households might live in the same neighbourhood and share common social ties and local amenities.


As a result, a very specific and local kind of inequality emerges within neighbourhoods. This phenomenon is sizeable in US metro areas, Census Bureau data shows. Not only do unequal households live very close together, but neighbourhoods also represent small communities where local inequality, on average, seems to track overall urban inequality.

For example, New York City, Chicago and Los Angeles all have neighbourhood income inequality at least 20 per cent larger than Washington’s, which matches the difference in the cities’ GINI indices. We found that inequality within individual neighbourhoods has also been rising precipitously over the past 35 years (even in very small neighbourhoods), indicating an increase of income heterogeneity at the community level.

This unexpected finding is likely related to the comeback of North American cities over the past decade – the so-called great inversion. Across the Americas, jobs and firms are moving back into major metro areas, attracting more skilled people, who are generally young, receive higher wages and prefer to settle down where their jobs are.

As high-income young couples buy up homes in historically distressed neighbourhoods long dominated by the working and renting class – and gentrify them – they push up income heterogeneity in those places. This is happening in cities across the Americas.

Gentrification has occurred in many North American cities, increasing local income inequality and, in some cases, tensions. Image: Michael Premo/Flickr/creative commons.

Keeping up with the Joneses

We wanted to better understand this phenomenon. Why is local income inequality rising? How can we quantify it? What are the trends in uber-localised inequality? And what does it all mean for city dwellers?

Those were the questions driving our study – So close yet so unequal: Reconsidering spatial inequality in US cities – which focused on US cities. Our preliminary findings were recently published in a Catholic University of Milan Working Paper.

Unlike traditional assessments of inequality, which accept administrative partitions of the city as the unit of analysis and measure income inequality in those neighbourhoods, we look at inequality among neighbours, putting people at the centre of our analysis.

The underlying thought experiment consists of asking individuals to compare their income with that of neighbours living within a given distance range (from few blocks to entire census areas), thus quantifying income inequality in that particular person’s neighbourhood.

In doing so for every person in a city – any city – one should be able to measure two aspects of spatial inequality: the average income inequality within individual neighbourhoods (is my neighbour richer than me?), and inequality among the average incomes of each neighbourhood (is that neighbourhood richer than mine?).

We found that these two indices define a typology of cities that mirrors what urban planners have found at the city level. Some places are “even cities”. Like Washington DC, they display relatively low income inequality everywhere.

Other metro areas, among them Miami and San Francisco, show high urban inequality, but high and low-income households are rather evenly distributed throughout the city. These are so-called “mixed cities”.

The largest US metro areas also have the most unequal neighbourhoods. In New York and Los Angeles, the way high and low-income households are distributed across the urban footprint reflects what planners call the “unstable city” model.

The Great Gatsby in the ‘hood

Such substantial and increasing inequality appears to imply several contradictory things for cities and their residents.

As shown in Figure 1, lower neighbourhood inequality is associated, on average, with large upward mobility gains for young people who grew up in poor families, a phenomenon reported in recent work by Stanford University’s Raj Chetty.

Figure 1: upward mobility in America’s urban neighbourhoods. Upward mobility gains/losses for children living in poor families in 2000, by Commuting Zone. Image: author provided.

Children of better-off families benefit, too, from living in a homogenous local community, thanks to “positive contagion” facilitated by social interaction among wealthy young peers.

Both findings are evidence of a “Great Gatsby Curve” in America’s neighbourhoods. That is, greater income inequality in one generation amplifies the consequences of having rich or poor parents for the economic status of the next generation.
Yet greater income inequality within individual neighbourhoods may actually be a good thing for poorer locals. Figure 2 shows that they experience life expectancy gains, perhaps due to positive health modelling and increased aspirations among poor adult residents.

Figure 2: Life expectacy in America’s urban neighbourhoods. Image: author provided.

Addressing inequality

For policy makers, then, our findings create an intergenerational trade-off. A “mixed city” model would seem to promote life expectancy gains for poor adults who live there, while the “even city” ideal furthers economic mobility of young people who grow up poor.

Lessons learned from such a policy debate in the US could have important international consequences.

No one has yet applied our neighbourhood-based inequality analysis to Latin America’s unequal cities. But we can see that in metropolises such as Mexico City, and São Paulo in Brazil, as well as in smaller cities, uncontrolled sprawl and lack of urban planning has increased the distances between high, middle and low-income households.

The view from the Rocinha favela, in Rio de Janeiro, where ‘urban renewal’ is now encroaching on some of the poorest parts of the city. Image: AHLN/Flickr/creative commons.

This is the “polarised city” model, and our paper found little evidence of it in US cities (with the exception of Detroit and Washington). Such places have substantial heterogeneity in income across neighbourhoods and relatively little heterogeneity within neighbourhoods.

In Latin America’s polarised cities, the poor are separated from the rest of the population. As a result, they have lower access and opportunities for education, employment and services. This inequality has been exacerbated by gentrification and by the region’s growing global economic engagement. This has strengthened urban elites’ connections to the world while relegating Latin America’s poor further into the periphery.


In such cases, increasing the urban income mix seen in New York City might actually have beneficial effects for the city’s neediest residents. This is a relevant area for future study. It would be interesting, for example, to plot cities across the Americas on the same graph, examining regional trends in longevity and mobility based on neighbourhood-level inequality.

The ConversationSuch hyper-local analysis would offer both policymakers and international agencies the kind of information they need to improve the lives of today’s city dwellers, both now and in the future.

Eugenio Peluso is associate professor of economics at the University of Verona. Francesco Andreoli is a post-doctoral researche at the Luxemburg Institute of Socio-Economic Research (LISER).

This article was originally published on The Conversation. Read the original article.

 
 
 
 

“One of the greatest opportunities facing our region”: Andy Burnham on making work better for older people

Andy Burnham (then health secretary) and Gordon Brown (then prime minister) meeting an older voter in 2010. Image: Getty.

In the Greater Manchester Strategy, published by the Combined Authority in October, we set out our vision for Greater Manchester, including our ambitions for employment.

It’s not simply about getting more people into work – though this is important, given that our employment rate across the region is still below the national average. It’s also about improving the quality of work; creating better jobs with opportunities for people to progress and develop. That’s why we’re working towards a Good Employer Charter to encourage businesses across the region to step up.

But if we want to make a real difference for the people of Greater Manchester, we need to focus on those who currently struggle most to find a job, including people with disabilities, people with fewer qualifications – and older people.

One in three people aged between 50 and 64 in the Greater Manchester area are out of work. Adding in older workers on low pay, nearly half (46.3 per cent) of 50-64 year olds in Greater Manchester are either out of work or in low paid, low quality jobs. This is a bad situation at any age – in your 50s, with fewer chances to get back into work and less time to make up the shortfall in income and savings, it’s terrible.

It’s also bad for the region. People out of work are more likely to have or develop health problems, and need more care and support from our public services. We are also missing out on the skills and experience of thousands of residents. If Greater Manchester’s employment rate for 50-64 year olds matched the UK average, there would be 19,000 more people in work – earning, spending and paying into the local economy. GVA in the region could grow by £800m pa if we achieved this. 

If it’s bad now, it’s only going to get worse unless we act. This is the fastest growing age group among working age people in Greater Manchester. And with the rise in State Pension Age, we are no longer talking about 50-64 year olds, but 50-65, 66 and eventually 67. There are more older workers, and we are working for longer. Many of us are now expecting to work into our 70s to be able to earn enough for our later lives.


As the State Pension age rises, older people without decent work must struggle for longer without an income before they can draw their pension. But if we approach this right, we can improve people’s lives and benefit our local economy at the same time. It makes financial and social sense.

Older people bring a wealth of knowledge and experience to the workplace, but we must make sure we provide a work environment that enables them to flourish. If we can help them get into good quality, suitable work, older people will be able to retain their financial independence and continue contributing to the region’s economy.

A report published earlier this week by the Centre for Ageing Better looks at exactly this issue. Part of our strategic partnership with the Centre for Ageing Better, the report is based on research conducted over six months with older residents in five communities with high levels of economic disadvantage across Greater Manchester.

In Brinnington, Stockport, the team met Adrian, in his late 50s. Adrian is a trained electrician, but since being made redundant ten years ago, has only managed to get a few short-term contracts. These short term, zero hours contracts, are “more trouble than they’re worth” and have left Adrian stressed and worse-off financially.

He has been sent on a large number of employment-related courses by JobCentre Plus, and has a CV with two pages listing training he has completed. However, these courses were of little interest to him and did not relate to his aim of finding stable work as an electrician. He told the team he only attended most of the courses so he “doesn’t get in trouble”.

Adrian recognises there are other types of work available, but much of it is warehouse based and as he is not in the best physical health he does not feel this work is suitable. He said he has “given up” on finding work – even though he still has 8 or 9 years to go until State Pension age.

Adrian’s story shows how badly the system is failing people like him – highly skilled, in a trade that’s in high demand, but being put through the motions of support in ways that make no sense for him.

A major finding of the report was the high number of people in this age group who had both caring responsibilities and their own health problems. With the need to manage their own health, and the high cost of paying for care, people found that they were not better off in low paid work. Several people shared stories of the complexity of coming off income support to take up temporary work and how this left them worse off financially – in some cases in severe debt.

The report concludes that changes are needed at every level to tackle chronic worklessness amongst this age group. This is not something that employment and skills services alone can fix, although Adrian’s story shows they can be much better at dealing with people as individuals, and this is something we want to do more on in Greater Manchester. But the health and benefits systems need to work in sync with employment support, and this is a national as well as a local issue.

Employers too need to do more to support older workers and prevent them from falling out of the labour market in the first place. This means more flexible working arrangements to accommodate common challenges such as health issues or caring responsibilities, and ensuring recruitment and other processes don’t discriminate against this age group.  

Greater Manchester has been at the forefront of devolution and has been using its powers to bring together health, skills and employment support to improve the lives of local people. The Working Well programme is a perfect example of this, providing integrated and personalised support to over 18,000 people, and delivering fantastic outcomes and value for money.

Such an approach could clearly be expanded even further to include the needs of older people. Ageing Better’s report shows that more can and needs to be done, and we will use their insights as we prepare our age-friendly strategy for Greater Manchester

We have to act now. In 20 years’ time, over a third of the population of Greater Manchester will be over 50. Making work better for all of us as we age is one of the greatest economic and social opportunities facing our city region.

Andy Burnham is the mayor of Greater Manchester.

For more about the work of Greater Manchester Combined Authority and its Ageing Hub, click here.