How Falling Inequality Rates Mislead

The Urban Institute's Rolf Pendall discusses results from his recent study of neighborhood inequality rates between 1990 and 2010. As one might guess, most regions fared poorly. "But there are exceptions to every rule: in 29 of the nation's 214 commuting zones (CZs) with over 250,000 residents, neighborhood inequality went down from 1990 to 2010."

However, only in some areas did incomes actually rise across the board. "In 21 CZs, inequality fell because of shared growth, with income rising significantly in both top and bottom neighborhoods. [...] In eight CZs, inequality dropped because economic restructuring undermined the regional economies to such an extent that middle- and upper-income households either left town, retired, or took pay cuts."

Self-segregation by the rich results in segregated poverty, and, perversely, regional equality. Pendall says we need more diverse metrics to evaluate economic outcomes. He asks, "Do places and nations prevent or reduce material hardship? Do they foster economic mobility over the life course and generations? Do they assure the economic security of people who are just getting by and resilience for those whose lives are disrupted?"