Inequality Is About Income and Neighborhood

Neighborhood-level inequality increased sharply between 1990 and 2010

By Rolf Pendall

The Urban Institute

It’s no secret that American inequality is growing: income inequality is at or near its highest levels since the 1920s, and wealth gaps are even higher than income gaps. Income inequality within metro areas is also higher than ever, and evidence suggests that high inequality can hamper growth at the metropolitan level as it does at the national level.

What about inequality at the neighborhood level? Using census data from our newly completed 2010 Neighborhood Change Database—funded by The Rockefeller Foundation—we identified the nation’s most privileged and most distressed neighborhoods and analyzed how they changed over time.

We first gave every census tract a neighborhood advantage score based on household income, homeownership rates, housing values, and college attainment. We then compared the top 10 percent of census tracts to the bottom 10 percent and found that, in 2010, household incomes and median housing values were over three times higher in the top tracts. Also, homeownership rates were twice as high in top tracts and college completion was six times higher, compared with the bottom tracts in 2010.

Looking at changes over time, we found that neighborhood-level inequality increased sharply between 1990 and 2010:

  • Adjusted for inflation, the average household income in the bottom tracts nationally grew by about $500 in 2012 dollars, but that of the top tract grew by over $15,000.
  • While inflation-adjusted home values gained almost $50,000 in the bottom neighborhoods, homeownership fell in these neighborhoods from 45 percent to less than 41 percent.
  • Housing values soared by almost $130,000 in the top neighborhoods as homeownership increased by five percentage points, to over 82 percent.
  • As for college attainment rates, bottom neighborhoods gained less than three percentage points while top ones gained almost 11.

Read full coverage and download the report here.

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