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March 4, 2014

STANCZYKIEWICZ: Poverty, inequality and opportunity

— New national research reveals that America is still a land of opportunity, but many Indiana communities rank poorly in fostering upward economic mobility for children and youth.

According to Harvard University’s Equality of Opportunity Project, despite a growing income gap between wealthy Americans and the rest of the country, the prospects of moving up the economic ladder are at least the same and even a little better today compared with 1971.

After examining changes in income over time for 40 million children and their parents, the Harvard researchers concluded, “Contrary to the popular perception, measures of [economic] mobility have remained extremely stable. If anything mobility may have increased slightly. The rungs of the ladder have grown further apart, but children’s chances of climbing from lower to higher rungs have not changed.”

However, economic advancement is not equal in all places. The Harvard study divides the United States into 741 regions and ranks those regions on the likelihood of a child moving from the bottom fifth of income into the top fifth. Of the 17 regions in Indiana, only five — including cities such as Vincennes, Greensburg, Madison, Wabash and Lafayette — are above the national median.

More concerning, four Hoosier regions — including cities such as South Bend, Muncie, Richmond and Indianapolis — rank in the bottom fourth in the country. In fact, among the nation’s 50 largest metropolitan areas, children raised in the Indianapolis region have the fifth worst likelihood of improving economically.

Yet, people move to Central Indiana for jobs in life sciences, technology, health care, higher education, advanced manufacturing and logistics. So how can the region that includes the state’s capital city fare so poorly in comparisons of economic mobility?

“There’s an important distinction between kids who grow up in an area and kids who move to an area to find a job,” explained Sarah Abraham, a senior researcher in the Harvard study. “When we’re talking about [the Indianapolis region] being a place of low mobility, we’re talking about the kids who are born and raised in those school systems and in that environment.”

The same is true of the other Indiana regions below the national median for economic mobility. Cities in those regions include Bloomington, Terre Haute, Gary, Evansville, Columbus, Elkhart, Fort Wayne and Kokomo.

The researchers found several factors impacting economic mobility. Segregation, by income or race, limits access to public services as well as information, role models and other precursors of economic success.

Quality K-12 education is essential, as is additional education after high school. Also, high rates of teenage pregnancy reduce a region’s prospects for economic advancement.

Solutions, meanwhile, can be found in community and family. Abraham explained that regions with high levels of “social capital” enjoy higher levels of economic mobility.

“It’s about involvement in your community and interactions among people,” Abraham said, noting the unique influence of community groups, neighborhood associations and religious congregations.

Most important, according to the Harvard research, is family structure, especially the prevalence of single parent households.

“This actually turns out to be the single strongest correlate of upward mobility we find in the data,” explained economics professor Raj Chetty who leads the Harvard project.

In a presentation to the World Bank, Chetty reported, “The fraction of kids being raised by married parents in an area is an incredibly strong predictor of rates of upward mobility.”

Without discounting the importance of the other factors, Chetty and his colleagues place priority on raising educational outcomes to improve economic results — starting at the earliest grades.

“There’s an incredibly powerful relationship between kindergarten test scores and earnings 20 to 25 years later,” Chetty told the World Bank. “If we can figure out [how to help more of our youngest students succeed academically], we can potentially have really big effects on children’s success.”

This year’s 50th anniversary of the War on Poverty finds Congress and the Indiana legislature debating which policies are best to reduce inequality and increase economic opportunity.

While those debates are important, local communities in the Hoosier State can focus on the family, community and educational factors that impact child well-being and strengthen opportunities for economic success.

— Bill Stanczykiewicz is President & CEO of the Indiana Youth Institute. He can be reached at iyi@iyi.org and @_billstan.

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