Posts Tagged ‘rich’

place

The neighborhood you grow up in matters. A great deal. Especially in a highly unequal society like the United States.

Just consider the chart above [ht: ja]. It shows that poor kids (at or below the 25th percentile) who grow up in Baltimore City county—where Freddie Gray was killed—will make, on average, nearly $3,500 less than the national average.

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The same is true across the country, including Cook County, Illinois. There (as shown in the chart on the left), a child in a poor family would make $3480—or 13 percent—less at age 26 compared to poor families nationwide (and they’d be much better off if they were raised in DuPage county). By the same token (according to the chart on the right), if a child in the top 1 percent were to grow up in that same county, they would make $1290 more at age 26 compared with children in families in the top 1 percent elsewhere in the country (but they’d do even better in Kankakee county).

That’s what we’ve learned from the new study by Raj Chetty and Nathaniel Hendren. Neighborhood matters. A great deal. Especially in a highly unequal society like the United States.

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But, in all honesty, we’ve known that neighborhood matters for a long time. Since at least 1901-02, when Charles J. Bushnell published his pioneering study of the Stock Yards neighborhood in the American Journal of Sociology (as if to confirm Justin Wolfers’s observation that “sociologists have typically been quicker than economists to embrace the idea that neighborhoods are important”). Which, remember, was the same neighborhood (referred to as Back of the Yards) Upton Sinclair wrote about in The Jungle.

Bushnell’s analysis was particularly compelling because he compared two neighborhoods that butted up against one another on the south side of Chicago: Back of the Yards and Hyde Park (where the University of Chicago is located). What he showed, for example, is that in 1897, 70 per cent of the families in economic distress were found in 27 per cent of the territory, while in 1900 92.5 per cent of the distress was found in 27 per cent of the territory—and that the territory referred to was located wholly within the Stock Yard district. The difference between the two neighborhoods could not have been more stark.

But, Bushnell also observed,

it is significant to note the fact, indicative of the vaguely apprehended and poorly organized conditions of life in our large cities, that the very community which is thus helping to support the agency which is trying to rescue the people of the Stock Yard district from the effects of their bad sanitary and economic conditions, is at the same time, perhaps without recognizing the fault, sending its garbage over into the Stock Yard district to make its sanitary and economic conditions worse.

It is not just that conditions and outcomes were different in the two neighborhoods; the poor conditions in the Stock Yard district were caused, at least in part, by the fact that the residents of Hyde Park were using the Stock Yard district as their dumping ground.

And that’s the lesson we learned then but seem to have forgotten now: not only that neighborhood matters, but also that—”perhaps without recognizing the fault”—we continue to create and treat our poorest neighborhoods as both a source of enormous wealth and a dumping ground for the detritus of the tiny minority who manage to live elsewhere.

In other words, the solution to the slim prospects of children in poor neighborhoods is not to somehow encourage their families to move into better neighborhoods. What we have to do, as a society, is eliminate the very fact that neighborhood matters—in Baltimore, Chicago, and elsewhere—by transforming the economy that creates such unequal neighborhoods in the first place.

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. . .and students go on food stamps.

According to a new report by Moody Investor’s Service (cost: $550), the richest American universities are getting even richer.*

The coffers of the nation’s 40 wealthiest universities, including Harvard University, Stanford University and the University of Michigan, are filling at a faster rate than those of other schools, thanks to particularly strong investment performances and generous donors, according to a report to be published Thursday by Moody’s Investors Service.

“It’s really a tale of two college towns, if you will, or cities,” said Karen Kedem, vice president and senior credit officer at Moody’s. “Looking ahead, the expectation is that this [gap] will only widen.”

The 10 richest institutions held nearly one-third of total cash and investments at four-year schools in fiscal 2014, while the top 40 accounted for two-thirds. Wealth was concentrated among elite schools at similar rates before the financial crisis, but the gap shrunk as top schools lost big on more-volatile investments in 2008 and 2009.

They have more than recovered since then. Schools on Moody’s top-40 list saw assets grow by 50% between fiscal 2009 and fiscal 2014, significantly outperforming other schools with strong credit ratings but smaller asset bases.

Meanwhile, with tuition skyrocketing and wages remaining stagnant, more and more students are forced to rely on food stamps.

the price of tuition has risen 1,120% between 1980 and 2010. Tuition at four-year public colleges has gone up 25% since 2007. Many students are forced to choose between low-wage jobs to help pay for tuition and unpaid internships for credit to build experience in their chosen field.

Colleges, aware of the financial troubles their students face, have begun opening food banks on their campuses. In Massachusetts, 12 of the state’s 29 public college campuses operate pantries, according to the Boston Globe, and about 200 colleges nationwide now operate pantries, reports the Wall Street Journal.

It’s no surprise then that on Wednesday, Fight for $15 campaign organizers expected students from 170 campuses to join in what was the largest US protest by low-wage workers.

“It’s important for students to be involved because even if we aren’t working for McDonald’s or Walmart, we are still on McDonald’s or Walmart type of wages,” Robert Ascherman, a student activist from NYU, told the Guardian on Wednesday. He says some students have to choose between buying food or buying textbooks.

From 2001 to 2010, the percentage of US students on food stamps has more than doubled to 12.6%, up from 5.4%, according to a 2013 analysis by Philip Trostel, professor of economics and public policy at the University of Maine.

*Here are the lists of the ten wealthiest private and public universities in the United States:

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Disclaimer: I relied on food stamps in graduate school, until the Reagan administration cut back the program. I now work for one of the 10 richest private universities in the country.

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