Sam Podnar

27 October 2023

American society is unequal. But individuals from underprivileged groups can accrue power and stability through tools of upwards mobility—mainly homeownership, employment, and education. A frequently overlooked way to strengthen these tools and improve access to them is through interactions between privileged and disadvantaged individuals. However, in the U.S., Black, Native American, and other people of color have historically been denied access to elite spaces in which they can make the necessary connections with the affluent to improve income and quality of life.

The U.S. has the highest income inequality among the G7 countries (1). In 2015, a family in the top one percent received an average of 26.3 times as much income as a family in the bottom ninety-nine percent (2). This inequality is highly stratified along racial lines, with a typical white household earning over $30,000 more annually than a typical Black household. This Black-white wealth gap—which more accurately represents disparities in access to tools that build wealth over time, like homeownership and education—is even greater: The median white household holds nearly eight times as much in net assets as the median Black household (3). 

Richard Rothstein, author of The Color of the Law, points out that the Black-white wealth gap is twelve times greater than the Black-white income gap because of residential segregation. Realized through a combination of private real estate practices and federal, state, and local policies, residential segregation has locked Black Americans out of homeownership, leaving them without the most valuable asset they could pass down through generations (4). Residential segregation also limits Black Americans’ access to other paths of mobility—like education and employment—in addition to affecting their outcomes in health and interactions with police. 

Just as the government effected residential segregation, it now has both the power and responsibility to desegregate American communities. But segregation that goes beyond residential, including in schools and workplaces, can also be detrimental to wealth accumulation through the limitation of relationships between more and less affluent people. 

A 2022 study led by economist Raj Chetty used Facebook friendships to measure multiple dimensions of connectedness, like network cohesiveness and civic engagement. The researchers found that economic connectedness—measured by the proportion of high-socioeconomic status (SES) friends a low-socioeconomic person has—is correlated with a boost in social mobility more than any other factor studied, such as economic inequality, educational outcomes, family structure, and even racial segregation. (Socioeconomic status is calculated by combining several measures, including average incomes in an individual’s neighborhood and educational attainment.) Individuals generally benefit more from living in an area with a high level of economic connectedness than from living in a high-income area (5). 

The researchers found that children in Minneapolis—where nearly half of a typical low-SES individual’s friends are high-SES—will earn an average of $34,300 by the time they hit thirty-five; in Indianapolis, there is a much lower degree of economic connectedness and a corresponding average income of only $24,700 by the age of thirty-five (6). As measured by the share of high-SES people living in low-SES neighborhoods, Minneapolis exhibits much higher exposure than Indianapolis which reflects the reality of less segregation there, yet Indianapolis exhibits remarkably high friending bias—or the tendency for low-SES individuals to not befriend high-SES individuals even if they have plenty of exposure to them (7). This means that low-SES individuals in Indianapolis are both interacting less with high-SES individuals and are not forming relationships with them when they have interactions.

So, how does economic connectedness promote mobility? If we think of social capital as networks that uplift, those with more social capital have access to higher quality networks (i.e. the more affluent) and have access to greater support, information, opportunities, and resources. It’s who you know, in addition to what you know (8). 

A project undertaken by a private gym in Boston demonstrates the benefits of greater interconnectedness. InnerCity Weightlifting trained low-SES individuals in personal training and paired them with high-SES clients. The high-SES clients began to support their trainers in jail and in court, offer them job opportunities, and pay for the trainers’ children to attend summer camp with their own children. By giving people the space to form relationships across class lines, the gym was, as the owner puts it, “flipping traditional power dynamics, blurring social norms, and bridging social capital” (9).

This theory of connectedness has policy implications on the macro level that promote interactions between low- and high-SES individuals—including desegregation and zoning laws that promote mixed-income communities, affirmative action programs and recruitment efforts designed to get more disadvantaged students into higher education, and mentorship programs to help people advance their careers. It can also operate on the hyper-local level to change the structures of interaction within already diverse groups. Chetty and his colleagues reference a public high school in Texas that has socioeconomic diversity but much less cross-class interaction, facilitated by the existence of multiple cafeterias and libraries that enable student cliques. The school is remedying this by undertaking a redesign of its facilities that includes only one cafeteria and more common spaces (10). 

One recent study found that summer camps, which bring together children of a range of socioeconomic backgrounds, may greatly reduce friending bias (the researchers use the phrase “socioeconomic homophily” to define the tendency of people to befriend only those who are similar to them), indicating that it is highly dependent on contextual factors. Once those contextual factors are removed in a setting like summer camp, economic connectedness—and thus mobility—can occur (11).

Think about the job opportunities that come, for example, from attending an elite college. One study found that the boost to future income from attending more elite colleges is greatest for students from disadvantaged backgrounds, while it seemed to matter little for students who already came from affluent families (12). Think about the access to career resources that come from being in a Parent Teacher Association or Homeowner Association with white collar, well-connected individuals (like in the InnerCity weightlifting example)—and how large swaths of the country are cut off from those opportunities, just by virtue of where they live and with whom they frequently interact. Any student can tell you that networking is everything, but with whom different people have the chance to network is often out of their hands.

The policies of the past created the massive wealth gaps we see today. So, the policies of the present should be aimed at remedying them. It is a widely held assumption that opportunity is dictated by where you grew up and who you know. But the U.S. will not make a dent in its massive and expanding levels of class and racial inequality unless all levels of government acknowledge that their policies have greatly impacted the quality of public services and opportunities offered where people grew up, changing who they get to know over the course of their lives. A government that implements policies that stifle mobility can implement policies that promote it, especially those that deliberately and creatively increase economic mixing. 

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Image via Pexels Free Photos.

References

(1) Juliana Menasce Horowitz, Ruth Ignielnik, and Rakesh Kochhar, “Trends in income and wealth inequality,” Pew Research Center, January 9, 2020, https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/.

(2) Estelle Sommeiller and Mark Price, “The new gilded age,” Economic Policy Institute, July 19, 2018, https://www.epi.org/publication/the-new-gilded-age-income-inequality-in-the-u-s-by-state-metropolitan-area-and-county/.

(3) Emily Moss, Kriston McIntosh, Wendy Edelberg, and Kristen Broady, “The Black-white wealth gap left Black households more vulnerable,” Brookings, December 8, 2020, https://www.brookings.edu/articles/the-black-white-wealth-gap-left-black-households-more-vulnerable/.

(4) Katie Nodjimbadem, “The Racial Segregation of American Cities Was Anything but Accidental,” Smithsonian Magazine, May 30, 2017, https://www.smithsonianmag.com/history/how-federal-government-intentionally-racially-segregated-american-cities-180963494/.

(5) Raj Chetty et al, “Social capital I: measurement and associations with economic mobility,” Nature, 608 (August 2022): 108-121, https://doi.org/10.1038/s41586-022-04996-4.

(6) Ibid.

(7) “Social Capital Atlas,” Opportunity Insights, https://www.socialcapital.org/?dimension=EconomicConnectednessIndividual&geoLevel=county&selectedId=&dim1=EconomicConnectednessIndividual&dim2=CohesivenessClustering&dim3=CivicEngagementVolunteeringRates&bigModalSection=&bigModalChart=scatterplot&showOutliers=false&colorBy=.

“Most to Least Segregated Metropolitan Regions in the US,” Othering & Belonging Institute, 2019, https://belonging.berkeley.edu/most-least-segregated-metro-regions.

(8) Richard V. Reeves and Beyond Deng, “Who You Know: Relationships, networks and social capital in boosting educational opportunity for young Americans,” May 26, 2022, https://www.brookings.edu/articles/who-you-know-relationships-networks-and-social-capital-in-boosting-educational-opportunity-for-young-americans/.

(9) “Meet Jon Feinman of InnerCity Weightlifting in Dorchester and Kendall Square,” BostonVoyager, October 12, 2018, http://bostonvoyager.com/interview/meet-jon-feinman/.

(10) Raj Chetty et al., “Social capital II: determinants of economic connectedness,” Nature, 608 (August 2022): 122-134, https://doi.org/10.1038/s41586-022-04997-3.

(11) Marion Hoffman and Timothée Chabot, “The role of selection in socioeconomic homophily: Evidence from an adolescent summer camp,” Social Networks, 74 (July 2022): 259-274, https://doi.org/10.1016/j.socnet.2023.04.002.

(12) Stacy Berg Dale and Alan B. Krueger, “Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables,” National Bureau of Economic Research, August 1999, doi: 10.3386/w7322.