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Why the place you grow up can limit earning power for life

Poor children in Baltimore face worse economic odds than low-income kids elsewhere. That’s according to a new analysis by Harvard’s Equality of Opportunity Project, which found that where a child is born has a huge effect on their future financial success. Gwen Ifill learns more from Nathaniel Hendren of Harvard University.

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  • GWEN IFILL:

    In New York today, on the campus of Lehman College in the Bronx, President Obama launched the My Brother's Keeper Alliance, the independent nonprofit that he says will outlive his presidency by tackling the underlying problems that have led to the unrest in cities like Baltimore. Its goal? To reduce the opportunity gap for black and Latino men.

  • PRESIDENT BARACK OBAMA:

    Those opportunity gaps begin early, often at birth. And they compound over time, becoming harder and harder to bridge, making too many young men and women feel like, no matter how hard they try, they may never achieve their dreams.

    And that sense of unfairness and of powerlessness, of people not hearing their voices, that's helped fuel some of the protests that we have seen in places like Baltimore and Ferguson and right here in New York.

  • GWEN IFILL:

    Baltimore is not the only urban area coping with the challenges of expanding opportunity in poor communities, but according to a new analysis by Harvard's Equality of Opportunity Project, it may be one of the worst.

    As laid out in The New York Times, poor children in Baltimore face even worse odds than low-income kids elsewhere, mostly because they remain in impoverished neighborhoods.

    Baltimore in fact ranks among the worst areas when it comes to mobility. As this map shows, by the time he or she reaches the age of 26, a poor child growing up in Baltimore city will earn nearly $3,400 less than his or her counterpart in nearby Baltimore County, and about $2,400 less than in suburban Howard County.

    But there's a bigger picture.

    Nathaniel Hendren of Harvard University is a principal member of the team that did the research. He joins me now.

    We talked about Baltimore as an example of a place where, frankly, young — poor young people are most likely to get stuck. Why is that?

  • NATHANIEL HENDREN, Harvard University:

    Well, we looked at a range of factors that kind of characterize places that have very, very low effects on children.

    And we find that, broadly, there's five factors or characteristics of places where kids from poor backgrounds don't do very well. And those are places that have more economic and racial segregation, places with more income inequality, places with less social capital, measures of civic engagement, areas where the family structures aren't as strong, and areas where the schools aren't as high-quality.

  • GWEN IFILL:

    Now, some of those things you just outlined sound like common sense. They're what we instinctively, kind of intuitively believed, right? But what's different about this report in proving that?

  • NATHANIEL HENDREN:

    Well, I think what we try to drive home is the variation across the United States in the opportunities that are present for children.

    And what our research documents is that if you take the same child and put them in two different places, it will dramatically shape the way in which their economic outcomes are realized later in life. And so I think documenting the dramatic variation across the U.S. and the impact that places have on that variation is the primary aspect of the work.

  • GWEN IFILL:

    So, let's move away from Baltimore, where we have been consumed with looking at the most tragic outcome of this kind of entrenched poverty in getting stuck, I suppose, and go to some place like Illinois, Cook County, the home of Chicago, and DuPage County, Illinois.

  • NATHANIEL HENDREN:

    Mm-hmm.

    Yes, so Cook County and DuPage County, so the western suburbs of Chicago, very close together, but if you take the same child and imagine they spend 20 years growing up in Cook County, on average, they would grow up and earn about $23,000 a year when they turn 26.

    Take that same child, have them grow up just in the western suburbs of Chicago, by the time they turn 26, they would be earning on average about $30,000, so about a 30 percent increase in their incomes just from the differences in exposure to growing up in downtown Chicago vs. the western suburbs.

  • GWEN IFILL:

    The president was talking today about his My Brother's Keeper initiative and he was focusing particularly on outcomes for young boys of color. Does your research show that that is a particular problem? Why not young girls or even poor white kids?

  • NATHANIEL HENDREN:

    So, I think that's largely justified.

    If you look across the U.S., there's much more variation in the impact places have on young boys from low-income backgrounds as opposed to young girls. And so we were mentioning Baltimore in particular. Of the 100 largest counties in the U.S., Baltimore has the lowest impact on low-income boys.

    So, you take a low-income boy that spends 20 years growing up in Baltimore, as opposed to the western suburbs of Chicago, we think their incomes would be 50 percent lower as a result of that experience.

  • GWEN IFILL:

    So, we focus on mobility, but what happens if you can't move? You can't move everybody.

  • NATHANIEL HENDREN:

    Yes.

    Broadly, we see the research sort of highlighting two different potential directions for policy. On the one hand, you can try to give people opportunities to move to different places, maybe give them housing vouchers for parents with young kids. But, on the other hand, we really have to think and do more research to really understand what is it about Baltimore vs. the western suburbs of Chicago that is leading to these dramatic differences in their impacts on low-income children's incomes in adulthood.

  • GWEN IFILL:

    When you talk about the issues that drive this, segregation big among them and flawed education systems being among them, are there policy solutions that exist which aren't just throwing money at the problem?

  • NATHANIEL HENDREN:

    Well, I think, for us, that's the important question.

    And I think that, honestly, there's more research that needs to be done to understand what is it? What is the best lever by which to change neighborhoods to make them produce higher outcomes for low-income kids?

    But I think a lot of this does come back to some of the common sense you were referring to, the quality of the school system, allowing for a greater access to mixings between people of different backgrounds. I think that it's hard to argue that that is going to reduce outcomes for low-income children and probably is a good start.

  • GWEN IFILL:

    How about the age of kids involved? Does it matter whether you move when you're in first grade or if you move when you're in 10th grade, as long as you move?

  • NATHANIEL HENDREN:

    Actually, it does.

    So, we find is that places matter in proportion to the amount of time you spend growing up there. So, the longer you spend, every additional year a child spends growing up in a good place improves their outcomes. Moving younger is better, because your child would get more exposure to that good place. But it's never too late to move to a good place to try to improve your child's outcomes in adulthood.

  • GWEN IFILL:

    I guess I keep coming back to this question that, if the solution is moving, what happens to what is left, the neighborhoods that are left behind?

  • NATHANIEL HENDREN:

    Yes. No, I think that's right.

    And, again, what we see this as is highlighting that it does matter where you grow up. Exposure to good neighborhoods is something that improves child outcomes. But you're absolutely right that that doesn't mean that the only policy solution to this is to just move people to different areas.

    I think we do have to figure out what is it about places that are producing poor outcomes and what is it about places that are producing high outcomes, and really find the right policy levers to bridge the divide.

  • GWEN IFILL:

    Another big question with really complicated answers.

    Nathaniel Hendren in Harvard, thank you very much.

  • NATHANIEL HENDREN:

    Thanks for having me.

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