​Segregation in the City: Why Some Hot Spots Breed Class Isolation

Some of the brightest new entrants into the work force – in Tech and beyond – walk out onto the field at Stanford University for commencement. 

In terms of residential segregation, how would you expect New York and Los Angeles to fare in comparison to, say, Minneapolis-St. Paul? If we’re talking about the integration of residents with and without a college education, the answer might surprise you.

Research from the Martin Prosperity Institute found that higher paid and typically college-educated “creative workers” living in many big cities are less integrated within the overall population than those living in smaller metros in the Midwest and Sunbelt. The study involved more than 350 U.S. cities and examined where the “creative class” – employed in fields such as technology, engineering, business, healthcare, law, media and entertainment – live in relation to the “service class” – those employed in lower paid and typically low-skill positions.

This divide within cities and disparity between U.S. metros has been associated with a web of factors not easily resolved.

Income inequality

Increasing income inequality accounts for about 20% of the segregation seen in cities, according to Richard Florida, director of the Martin Prosperity Institute and a senior editor for The AtlanticResearch released in July by Rebecca Diamond, assistant professor of economics at Stanford Graduate School of Business, shows that the expected earnings of a college grad were 38% more than a high-school grad in 1980 and a whopping 73% more in 2011, according to Census figures. This has been hastened by the disappearance of many manufacturing jobs, which offered good pay for those without a formal college education. As different housing budgets beget different neighborhoods, cities with the greatest income disparities generally show the greatest class segregation, Florida says.

Density and desirability

If you live in a city where everyone wants to be, chances are it’s more highly segregated. As Florida explained in a radio interview, large cities are “great incubators of ideas,” and therefore attract highly educated “knowledge” workers. But they also attract very poor residents who are seeking work, he says. A densely populated city creates more demand than supply, allowing the most desirable neighborhoods to command top dollar. This drives less-affluent residents out of these areas and creates a clustering of high-wage workers. In extremely inflated markets like San Francisco and Washington D.C., it can even push low- and medium-income residents out of the city.

Hotter hot spots

While the cost of living has always been higher in highly desirable cities, the disparity between hot, tepid and cool markets has increased – and, in turn, increased class segregation. As Washington Post reporter Emily Badger points out, “the median rent in metropolitan Washington wasn’t always twice the median rent of Louisville.”

Diamond found that cities with a higher number of college grads in 1980 attracted a larger share of college-educated professionals over the next 20 years than cities that initially had less-educated populations. More college grads means higher demand for local goods and services, Diamond says, creating jobs for the less skilled. But this also creates a high concentration of both high- and low-skill workers, and the ensuing increase in segregation as desirability pumps up housing prices.

Shifting industries

People go where the jobs are, so it makes sense that cities with an economy balanced on more than one industry have been able to maintain greater integration in the face of changing times. Despite the collapse of the steel industry, Pittsburgh has maintained “low housing costs, a solid base in amenities, and a growing economy,” thanks to a strong foundation of educational and healthcare institutions, Diamond says.

In contrast, cities known for a particular industry – whether it’s energy in Houston or tech in San Jose – typically experience greater class segregation. This dilemma is going to become increasingly important, as many cities seek economic improvement through the development of highly specialized industry clusters. As these studies show, tax incentives and other programs that entice college grads and national companies could exclude others.

 Cover photo courtesy of Ed Finn