In 2014, Harvard economist Raj Chetty issued a study showing that children born in Charlotte in 1978 had less chance of pulling out of poverty than any other metro area in the U.S. The report stunned community leaders, prompting various efforts to improve the lot of low-income families and children.
Earlier this year, Chetty offered an updated report based on children born in 1992. It showed Charlotte had moved to 38th in upward mobility, marking the third-most progress of the 50 markets. The birthdates reflect researchers’ desire to track incomes for young adults reaching the age of 27 or 28.
So when Chetty addressed more than 200 community leaders last week at the Mint Museum Uptown, there was a clearly positive vibe about the Queen City’s progress. While the professor suggested much more work needs to be done, he noted that his upcoming column in the New York Times about societies that encourage economic opportunity would include some praise for Charlotte’s work.
“It’s a remarkable amount of change,” Chetty said, noting that like other cities, Charlotte is dealing with inequities that can be traced back to slavery and Jim Crow laws. Atlanta, which ranked 49th in the study in 2014, declined to 50th this year.
But he said abundant data suggests that Black Americans are “doing better than in years before” and that class is becoming a more important determinant of economic mobility than race.
As reported when his latest report was released, Chetty’s key finding is that the overall employment health of a community was a more important indicator of future success than the job status of an individual child’s parents. Said another way, even if one’s parents are employed, a child growing up in a city where many people are out of work limits their opportunity to move up economically, he said.
Enormous gaps remain between Blacks and other racial groups in terms of wealth and income. Chetty’s report showed that the Black households in Charlotte in the latest study had average household income of about $23,000, compared with about $31,000 for both White and Hispanic households and $33,000 for Asians. The 5% average income increase in Charlotte was greater than any other market, except for Austin, Texas, he said.
Black children in Charlotte households with incomes in the bottom 20%, had a 34% chance of staying in that quintile in the latest study, versus 40% in the earlier research. By comparison, 30% of white children in households with incomes in the bottom 20% were likely to stay in that quintile, versus 25% previously.
Moreover, nationally, only 3% of Black children in the bottom quintile moved up to the top 20%, compared with about 12% of white children, 9% of Hispanics and 20% of Asians.
In his talk, Chetty emphasized that social capital is an important factor in economic mobility that is often overshadowed by discussions of increased spending. He has defined social capital as a combination of economic connectedness such as friendships across class lines; social cohesion, reflecting how people interact within the community; and civic engagement, such as how much people volunteer for civic projects.
“We find that the most successful politics have social capital elements,” he said.
The event’s organizer was Leading on Opportunity, an affiliate of the Foundation for the Carolinas that is a key promoter of economic mobility programs. Sponsors were Novant Health and Bank of America.
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.