Michigan Policy Wonk

Not all childhoods in Michigan are created equal. A child who grows up in Genesee County will be $5,100 behind the national average income by age 20. Just to the south, in Oakland County, 20-year-olds will be making nearly $5,000 more on average.

It’s a stark contrast, but elsewhere the difference is even more severe, according to data compiled by The New York Times from research conducted by Raj Chetty, an economics professor from Stanford University, and his team at the Equality of Opportunity Project.

Upward mobility in the United States varies significantly by region. The southeast has some of the worst impacts on children’s income in the nation, while the western half of the Midwest and the Rocky Mountain regions have some of the best. The map below, from Chetty's research, illustrates probability of a child born in the bottom 20% of income distribution in a given region of reaching the top 20% of income as an adult.

The non-profit institute’s research illustrates how much income variance there is from one metropolitan or rural area to another. For example, a child who grows up in Macomb County — or moves there at a very young age — gains $1,460 in income by age 20. Macomb County and Genesee County are only separated by an hour drive on the freeway, but their children have a $6,560 income discrepancy between each other.

The Equality of Opportunity Project gathered data for children born in the 1980s in 741 metro and rural areas throughout the United States. The project qualified upward mobility by measuring the children who, born in the bottom fifth of the national income distribution, moved to the top fifth of income distribution by age 26.

The data shows that moving from a neighborhood with low-upward mobility to one with higher-upward mobility improves children’s outcomes as adults in a variety of ways.

The Moving to Opportunity Experiment — also conducted by Raj Chetty — shows that children whose families move away from low-upward mobility neighborhoods before the age of 13 have 30% higher earnings when they are 26 years old. These kids are 27% more likely to attend college, and are 30% less likely to become single parents.

That same move at a younger age will have an even greater impact. A nine-year-old child who moves to a wealthier area will have an outcome that falls 50% between their original location, and their destination location. In other words, if a nine-year-old moves from Genesee (-$5,100) to Macomb (+$1,460), they will gain approximately $3,280 compared to if they had remained in Genesee.

Michigan varies drastically from county to county, and even neighborhood to neighborhood regarding the upward mobility of kids with parents in the bottom fifth of the income distribution. The table below shows the large variance of outcomes between four large counties in Michigan. Detroit is a part of Wayne County, and Grand Rapids is a part of Kent County.

Factors that affect upward mobility in communities include residential segregation, areas with a higher percentage of single parents, the quality of schools, and the percentage of African-American residents.

Residential segregation limits the variety of opportunities available to children, as connecting with people who are of different backgrounds and/or better means can lead to better outcomes as adults. Attending schools with larger budgets, smaller class sizes and higher average test scores all lead to increased mobility.

Race plays a crucial role in the mobility of children. Isabel Sawhill and her team published a report with the Center on Children and Families at the left-leaning Brookings Institution, which analyzed the relationship between race and mobility closely.

They utilized data from the National Longitudinal Survey of Youth, and set parameters for achieving success in life at 5 different ages – 5 years old, 11 years old, 19 years old, 29 years old, and 40 years-old. Success at age 5 is defined as having acceptable pre-reading and math skills, and behaving appropriately in school. Sawhill’s report shows a 12% disadvantage for blacks compared to whites at this early life stage. The disadvantage steepens at nearly every stage, resulting in a 34% disadvantage by age 40.

In a summarization of data collected, Chetty describes two policy approaches to his team’s findings. First, housing vouchers can be subsidized for the poor, enabling them to move to better neighborhoods. The drawback of such an approach is that it fails to address the root problem – these low mobility neighborhoods need help. Thus, the second approach is to work towards improving neighborhoods that do not offer their residents a fair chance at increasing their incomes to and above the national average.

Information about a new course taught by Chetty on how to use big data to solve social and economic problems can be found here.

Stephen Dubner – co-author of Freakonomics – interviewed Chetty on his podcast, asking him about his background and the implications of the research he and his team conducted.

Isabel Sawhill’s study can be found here, wherein she further describes the data analyzed and gives the parameters for success at each life stage.

Silas Olson in an undergraduate policy fellow at the Institute for Public Policy and Social Research. IPPSR recently held a forum, Putting the American Dream within Reach, focusing on the the state of the American Dream in Michigan. A full summary of the forum, along with a video of the presentation, will be made available in the near future.