Below is a complimentary Demography Unplugged research note written by Hedgeye Demography analyst Neil Howe. Click here to learn more and subscribe.

Howe: Why Poverty in America Has Grown More Concentrated - 6 16 2020 9 10 03 AM

New research on poverty in America indicates that from 1980 to 2018, the number of metropolitan high-poverty neighborhoods doubled. In part, this shift has occurred because poor Americans have become increasingly concentrated in moderate and high-poverty neighborhoods; it’s now rarer for them to live in low-poverty areas. (Economic Innovation Group)

NH: When we talk about measuring trends in poverty, we typically think about the number or rate of Americans below the official poverty line. These authors take a different approach. They look at the number or rate of Americans who live in "high poverty neighborhoods" (which they define as an entire census tract with a very high poverty rate).

They argue, with some justification, that families and especially children who live in these neighborhoods are uniquely disadvantaged--due to the high unemployment, low income, low education, worse health, shorter life expectancy, and higher rate of violence of most of their neighbors.

To put it another way, it may be difficult enough to be jobless or poor or lack skills when you live in a middle-class or affluent community. But it is surely much more difficult if everyone around you shares your situation.

The total U.S. poverty rate has gone up and down with the business cycle over the last four decades, but overall it has improved only modestly. It was 13.0% in 1980, and it was 11.8% in 2018. It is likely to improve a bit more in 2019 (number to be released in a few months) and then get much worse again in 2020.

These researchers observe, however, that a rising share of poor Americans live in high-poverty neighborhoods. Back in 1980, 28% of America's poor lived in tracts where the overall poverty rate was under 10%. 42% lived in tracts where the overall poverty rate was over 20%. Today, those figures are 20% and 49%, respectively. Thus, you might say, American poverty is becoming more concentrated in high-poverty communities over time.

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Regionally, the researchers point out, most high-poverty census tracts are located in the Northeast, the Midwest, and the South. And their total number has grown--in fact, has nearly doubled, from around 3,500 to 6,500--though the population living in each of these neighborhoods has mostly declined (think: Detroit).

They also point out that median household income in the highest-poverty tracts has risen the least since 1980. And incomes in the lowest-poverty tracts has risen the most. That largely reflects the nationwide trend toward growing income inequality.

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High-poverty neighborhoods, moreover, are very durable over time. Two-thirds of the high-poverty tracts in 1980 remained high-poverty in 2018. Only 14% of them "gentrified" into low-poverty neighborhoods. Most of these gentrification cases have occurred in newly affluent core urban areas (nearly a quarter of them in New York City alone). What happens instead to most high-poverty tracts is that they stay poor and gradually depopulate over time, and new high-poverty tracts appear--often in what used to be a city's suburbs. (Houston and Winston-Salem are good examples of this.) More than half of today's high-poverty tracts were not high poverty back in 1980.

Is the growing concentration of poverty linked to longstanding patterns of segregation by race? This clearly is not what's happening. Segregation of African-Americans across urban neighborhoods has fallen dramatically in recent decades. (See "Segregation by Race in Steep Decline.") Similarly, according to these authors, the black share of high-poverty neighborhoods has fallen: It was 58% in 1980 and only 34% today. That's still two to three times larger than the black share of the total U.S. population. But it's much less than it once was.

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So which races have growing shares? Mostly Hispanics, who now comprise 35% of high-poverty neighborhoods (up from 20%). And whites, who now comprise 24% (up from 20%).

The report's authors offer no overall explanation for why this concentration of poverty is occurring. It may be related to "the big sort" thesis (advanced by Bill Bishop back in the 1990s), which suggests that Americans are increasingly "sorting themselves" into like-minded communities that are homogeneous with respect to income, education, lifestyle, and politics.

It may also be linked to Charles Murray's observation (see Coming Apart) that inequality within races has now become more salient than inequality between races.

One further possibility is that the shift is driven by the changing composition of poverty by family type. Forty years ago, a much larger share of households in poverty were either seniors or lived in families with children--and a larger share of those families were married. As such, they may have been more easily accommodated by affluent communities as neighbors. (Today, married-couple households comprise less than 15% of all households in poverty.)

But of course that may be just another way of describing how Americans today are choosing to "sort themselves out" by lifestyle.

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Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.

A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.

Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."

Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.

Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.

Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.