An Introduction to Income Inequality and Economic Mobility

by Anise Vance

This is the second in a series of pieces on opportunity, income inequality, and economic mobility. Complementing The Boston Foundation’s Opportunity Forums, and its year-long effort to highlight income inequality, this series will touch on a wide variety of research and topics pertaining to economic mobility. For more on the Opportunity Forums, please visit: www.tbf.org/opportunity.

On September 17, 2011, a group of protesters descended on New York City’s Zuccotti Park. Eventually numbering in the thousands, the protesters camped in the park for almost two months. In that time, they inspired the Occupy Movement, an international phenomenon that engaged thousands upon thousands of people unhappy with the economic status quo. While the movement’s messages were diverse, and sometimes contradictory, a central issue dominated their agenda: income inequality.

Understandably attuned to the drama of Occupy Wall Street, US national media focus broadened to include income inequality. Monthly mentions of the word “inequality” in US newspapers tripled. Presidential candidates across the political spectrum took heed of the issue as it rose in the nation’s collective consciousness. Four years later, the 2016 presidential hopefuls are still talking about it.

Despite what recent media coverage might suggest, income inequality, and the poverty it implies, is an old and stubbornly persistent issue. The 20th century, a period of economic booms and busts, included two grand federal projects aimed at addressing poverty: Franklin Delano Roosevelt’s New Deal and Lyndon Johnson’s Great Society. Public figures, including Dr. Martin Luther King Jr., Malcolm X, and numerous other civil rights leaders, were centrally concerned with the economic distance between classes. Yet despite the attention paid to income inequality and poverty, few lasting bridges ran across the chasm between the poor and the wealthy.

Scholars, growing more nuanced in their analyses of poverty, began sounding the income inequality alarm decades ago. In 1980, William Julius Wilson, a sociologist at the University of Chicago (and now at Harvard University), highlighted the role inter-generational accumulation of wealth, or lack thereof, plays in the creation of stagnant economic classes. Douglas Massey and Nancey Denton investigated the spatial arrangement of American cities, linking high rates of segregation to endemic poverty. Richard G. Wilkerson, a British scholar, explored the connection between unequal societies and health outcomes, finding that the two are highly correlated. A vibrant and interdisciplinary body of work thus arose in response to questions of inequality and economic mobility.

Notably, research on income inequality brought two significant sub-themes to the fore. Researchers began focusing on place — that is, the importance of a particular neighborhood, city, or region as a unit of analysis — and the interactions, barriers, and differences between places. The accumulation of familial wealth over time, as opposed to simple calculations on individual earnings, also attracted great attention. Simply put, a spotlight was shone on place and wealth.

Recent research continues to emphasize those two themes. Raj Chetty, an economist at Harvard, underscored the importance of place in series of studies on economic mobility. In those studies, he demonstrates that, holding for personal and familial variables, simply living in one area over another affects an individual’s future earnings. Similarly, Patrick Sharkey, a sociologist at NYU, argues that the concentration of disadvantage in particular neighborhoods is the greatest driver of inequality and, in particular, racial inequality. Geography, it seems, is at the heart of income inequality.

Closer to home, the Boston Federal Reserve bank recently released a report on wealth accumulation in Boston. The report found a startling gap between the wealth accumulated by people of color and white people. The median wealth of Boston’s white households is $247,500; the median wealth of Boston’s Caribbean black population, the city’s richest population of color, is $12,000. Clearly, enormous disparities in wealth are central to Boston’s unequal economic landscape.

The following pieces in this series will delve into much of the current research cited above as well as other work on income inequality and economic mobility. Importantly, our aim is not to prescribe solutions. Rather, we will explore the complexities and nuances of an issue that is among the city’s, and indeed our nation’s, greatest challenges. Our aim is to inform civic discourse with objective data and information in the hopes of fostering greater understanding and unity of vision around so pressing an issue. Our driving question will remain the same throughout: how can we create a city in which every resident has the opportunity to prosper?

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