AP, October 22, 2018: Job growth is found to be no cure for a community’s poverty
A healthy dose of job growth has long been seen as a likely cure for poverty. But new research suggests that poor Americans are frequently left behind even when their cities or communities benefit from hiring booms.
When such cities as Atlanta and Charlotte enjoyed a job surge in the 20 years that began in 1990, for example, the job gains mostly bypassed residents — often African-American — who had been born into poverty.
That is among the findings of a study led by Raj Chetty, a Harvard economist whose newly launched Opportunity Atlas found no association between job growth and economic mobility for poor residents of the affected areas.
“Job growth is not sufficient by itself to create upward mobility,” Chetty said. “It’s almost as though racial disparities have been amplified by job growth.”
His finding challenges much of the conventional thinking, of government officials, business executives and economists, that job gains are the surest way to lift up people in impoverished communities.
Additionally, living in neighborhoods with many two-parent families improves the likelihood of emerging from poverty— even when someone was raised by a single parent. Mobility is often greater for children who come from neighborhoods with higher-priced housing. And it’s generally better when a high proportion of adults in a neighborhood are working, according to the analysis by Chetty; economists Nathaniel Hendren of Harvard and John Friedman of Brown University; and researchers Sonya Porter and Maggie Jones of the Census Bureau.
The discovery that job growth is no panacea for impoverished neighborhoods adds a new complication to economic policy. As a community adds jobs, the pool of unemployed people should, in theory, decline, force up incomes and revitalize neighborhoods. But if economic mobility hinges at least as much on having a college degree, an intact family and racial equality, solutions become trickier.
There are even signs that the recovery of jobs after the Great Recession could worsen economic mobility. Recent data suggests that Americans who can afford to do so are increasingly clustering in the most prosperous parts of the country. Since the financial meltdown a decade ago and the recovery that followed, people with college degrees have increasingly settled in the wealthiest 20 percent of ZIP codes. These areas have enjoyed the most job growth and have accounted for almost all new business formation, according to a new report by the Economic Innovation Group, a policy and advocacy organization.
By contrast, in the most financially distressed 20 percent of ZIP codes, populations have dwindled, and there has been almost no recovery from the recession that officially ended more than nine years ago.
