Troubling new study explains one big reason for inequality in America

Black and Hispanic households tend to live in poorer neighbourhoods than white households even when they earn a similar income, a new study reveals.

These findings are troubling because they suggest black and Hispanic kids, by and large, grow up in poorer neighbourhoods than white kids.

A growing body of research suggests that neighbourhood poverty can have lasting negative effects on children, according to a study in the Annals of the Academy of Political and Social Science.

“If long-term exposure to neighbourhood poverty negatively affects child development, educational success, mental health, and adult earnings … then these large racial disparities in exposure to poverty may have long-term consequences,” according to the study, which we originally spotted in the Washington Post.

There are several explanations for persistent racial segregation in America even when black and white families make the same amount of money.

For one thing, white families might possess more overall wealth than black families even when they have similar incomes, allowing white families to buy homes in higher-income neighbourhoods. Racial discrimination in the housing market can also make neighbourhoods more racially segregated.

The subject of bias in the real-estate market was reignited on Thursday when the Supreme Court saved a law aimed at preventing housing discrimination. The Fair Housing Act, which prevents housing practices that unfairly affect minorities, was upheld, at the dissatisfaction of Justice Clarence Thomas.

Long-term impact

These findings are especially important considering that recent studies have found that neighbourhoods environments have a direct influence on children’s development and future income-earning potential.

These racial disparities in exposure to poverty, in term, contribute to long-term racial inequality in America.

As this chart shows, even a black family making $US100,000 a year lives in a neighbourhood where the median income is just over $US50,000. A white family with the same income lives in a neighbourhood where the median family income is closer to $US100,000.

Neighbourhood Median Income, by Household Income and Race, All Households in United States, 2009Sean F. Reardon, Lindsay Fox, Joseph TownsendNeighbourhood Median Income, by Household Income and Race, All Households in United States, 2009

Black and Hispanic families have a disadvantage compared to white and Asian families. Not only do they earn less on average, but those who earn the same amount do not have access to the same neighbourhoods. That means they don’t profit from the perks of richer neighbourhoods such as good schools and less violence.

A Harvard University study on the impact of neighbourhoods on intergenerational mobility looked at over 5 million children’s records and shows the neighbourhood children grow up in plays an important role in their long-term success.

The study also found that counties with higher rates of upward mobility often share five characteristics: “they have less segregation by income and race, lower levels of income inequality, better schools, lower rates of violent crime, and a larger share of two-parent households,” the study reports.

It also pointed out that areas with a larger African-American population often have lower upward mobility rates, which in turn impacts racial inequality over generations.

Another Harvard University study, which looks at the effects that better neighbourhoods have on children through the Moving to Opportunity (MTO) experiment, showed children growing up in nicer neighbourhoods had a much better chance of having a higher earning potential later in life.

The study found that moving a young child from public housing to a low-poverty area through the MTO experiment increases a child’s total lifetime earning by around $US302,000.

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