One thing you'll notice, if you stare hard enough at demographic data (or if you just travel around the country with eyes open), is the circular relationship between place, income, education, and housing costs. Whether that's a vicious circle, or a virtuous one, depends largely on whether you've been able to get inside the circle or not.
In other words, a place with well-paying jobs is likely to have higher housing costs, because more people wanting to live there to access well-paying jobs creates more demand, and landlords or sellers are better able to demand a bigger premium from those people. To have enough money to be able to find a place to live in a city with well-paying jobs, though, you already have to have a well-paying job (or a willing benefactor).
Likewise, well-paying jobs usually require more education. Obtaining more education requires tuition and fees, and the ability to defer wages temporarily while getting educated ... again, requiring a well-paying job (or that same benefactor). And getting a good education requires living in a place where a good education can be obtained, which tends to overlap with places with well-paying jobs and high living costs, again requiring you to already have money to get your foot in the door. It's a difficult carousel to get on, and a hard one to get back on if you get thrown off.
The increasing speed of this carousel—the greater disparity in pay between jobs that do and don't require a lot of education, the greater disparity in costs of living between places that do and don't have well-paying jobs—helps drive the growing inequality in this country, both economic and spatial inequality. Two different recent studies, which we'll discuss over the fold, shed some new light on the growing segregation.
You're probably already familiar with the concept of gentrification, where certain neighborhoods in cities benefit from an influx of more affluent residents. It's always a very mixed bag: the presence of residents with more education and more earning potential drives up property values, which in turn leads to better infrastructure (better schools, less crime) and better private sector amenities too (restaurants and supermarkets instead of take-outs and food deserts; banks instead of check-cashing places). But it displaces existing residents, who have to move somewhere more affordable but less functional; it also replaces unique, authentic communities with something blander.
A study by Stanford economist Rebecca Diamond proposes that this is happening at not just a neighborhood level, but at the level of whole metropolitan areas. (It's described by the Washington Post's Emily Badger in a piece called "A nationwide gentrification effect is segregating us by education.") In other words, whole cities—most notably New York City and San Francisco, but even in places like Atlanta and Philadelphia—are rapidly vacuuming up educated persons and shedding the less educated, who wind up relocating to entirely different cities, ones with weaker job opportunities and fewer amenities. As Badger describes it:
College graduates have flooded in, drawn by both jobs and amenities. Yet more amenities have followed to cater to them (luring yet more college graduates). Housing costs have increased as a result, pushing low-wage and low-skilled workers out. At the neighborhood level, this cycle sounds a lot like how we describe gentrification. At the scale of entire cities — picture low-skilled workers increasingly excluded from Washington and San Francisco and segregated into cities like Toledo or Baton Rouge — Diamond describes this as a kind of nationwide gentrification effect.
Part of that process is simply the increasing disparity between what a college graduate and a high school graduate can earn: In 1980, a college graduate could expect to earn 38 percent more than a high school graduate, but by 2000 that margin was up to 57 percent, and in 2011, it was 73 percent. But part of that is also increasing disparity in housing costs; the article doesn't quantify that side of the equation as effectively, but it does elaborate, "The median rent in metropolitan Washington, in other words, wasn't always twice the median rent in Louisville."
Unpacking that a little further, Washington and Louisville used to have more similar balances of white- and blue-collar workers, historically. But Louisville's manufacturing jobs have been increasingly replaced with less-lucrative service sector work, while Washington has increasingly moved in the direction of well-paid knowledge-sector jobs, and housing costs, driven by what the workers there can afford, have diverged accordingly in those places.
Now that might sound good for someone who doesn't have much education but already has a service sector job in, say, Washington: his or her income will go up too. (As the article states, "A higher share of college graduates [in a city] also yielded higher wages for workers without college degrees, likely because employees have to pay them more to keep them in higher-cost cities.") On top of the higher wages, he or she also gets to enjoy the amenities of the improving city: lower crime, less pollution, more food choices. But that's not good for someone in, say, Louisville, who wants to make the jump to the better pay and amenities of Washington, without somehow already having a well-paying (and higher-education-requiring) job lined up there. The widening disparity in costs among metropolitan areas makes it harder and harder to improve one's lot in life by jumping from the carousel that's going slower and slower to the one that's going faster and faster.
Someone on the slower carousel might still say, "Well, at least my dollar goes further in my smaller town." In fact, in any comment section that devolves into a rural vs. urban slugfest, that's likely to be the strongest selling point for those contending that it's better to stay put in the country (or to flee the city). Even Diamond (and/or Badger) seem to line up with that perspective in the Post article, while saying that the gratification provided by the amenities of the big city make up for the disproportionate cost:
Sure, the San Francisco tech worker has to spend a larger share of his income on rent than a low-skilled worker in Oklahoma City. But all of the added amenities of living in San Francisco outweigh that higher cost. It's not that high school graduates don't also value restaurants, cleaner air and less crime — but they may not be able to afford to live where those amenities exist.
But a separate study, by Arizona State University's Jose Lobo (as described in Atlantic's CityLab by Richard Florida), seems to contradict that idea. It shows that when you adjust for real average wages per job—in other words, when you factor out regional variations in cost of living—you
still do better for yourself in most of the major highly educated, highly compensated metropolitan areas. In other words, there's no sacrifice of money for more amenities; not only do you get more bucks in general, but you also get more
bang for your buck.
(To get technical, this is based on Regional Price Parities, which includes expenditures for food, transportation, housing, and education. But it goes a step beyond a more commonly used statistic, real per capita personal income, by focusing purely on wages. That's in order to exclude the impact of stocks and interest, for instance, so it's focused only on labor and not inherited wealth.)
It makes sense if you stop to think about it: sure, you're going to pay twice (or three times) as much rent in San Francisco as in Oklahoma City, though you'll also earn twice as much (or more) at the same job. But think about all the other ways in life that you get nickel and dimed: in San Francisco, you won't pay twice as much as in Oklahoma City for a bag of groceries, or for a trip to the dentist, or getting your car fixed, or replacing your dead refrigerator, or paying your health insurance premium. You might well pay more for each of those things in the big city, but not twice as much.
To put it in more stats-heavy terms, real wages are still strongly correlated with overall average wages (with a correlation of 0.72). In particular, higher real wages are correlated with more knowledge-sector-oriented metropolitan areas, and the high-tech industry in particular.
You can see that when you look at the map at the top of the article, where metro areas with the highest real wages are dark colored. The most bang for your buck is still in places with the highest unadjusted wages, like the Bay Area, New York, Washington, Boston, Seattle, and Raleigh-Durham. (And, not coincidentally, the places most deeply involved in the knowledge-sector economy.)
Not all hope is lost for conservatives who want more bang-for-the-buck but can't fathom living in one of those dark blue metro areas, though. There are still a few Texas locales near the top, not because of super-high unadjusted wages, but because of a convergence between solid-paying, energy-sector jobs and very low housing costs. One is Houston, but if that's still too cosmopolitan and diverse for you, there's always the oil patch of Midland-Odessa, also one of the most conservative places in the country.
In general, though, when you look at the map you can see the pattern where the smaller and more isolated your metropolitan area is, the less bang-for-the-buck you're getting. (And this analysis doesn't even touch the truly rural areas that don't fit in any metro area.) It's something our Democratic policymakers really need to think more about—not simply from the moral standpoint of improving the lives of people in these areas and making things easier for them, but also in terms of earning their political support (and—here's another problem that's circular—thus having the congressional majorities needed to be able to enact that policies that might help them).
The smaller metro areas getting less bang for the buck are the ones that are falling further behind in an increasingly polarized economy, and, in a lot of places, are also the ones that are trending away from Democrats (as well as simply getting angrier and more disengaged from the political process). The people in these locales know they're falling behind; they see things getting better in other parts of the country, but (unlike in previous centuries when migration was an American tradition) can't make that jump to somewhere else more promising when there's an inextricable tangle of financial, educational, and spatial barriers in the way, which only adds to their resentment. And they don't see anyone from either party doing much to ease any of those barriers.
