On Economic Inequality, Housing is Key to Mobility & Opportunity

In a recent Senate Budget Committee hearing, Brookings Institution fellow, Scott Winship testified on economic inequality, mobility, and opportunity. These three buzzwords have been the subject of much of political rhetoric and are difficult to measure. The importance of inequality, mobility, and opportunity become clear when we examine housing disparities.  Families who live in high poverty areas do not have access to the same quality services and opportunities as families in higher income neighborhoods.  Without high quality schools, libraries, and activities, children can become trapped in a cycle of poverty based largely on where they live.

Mobility quantifies how children are able to improve their financially status over that of their parents.  The good news is that the United States currently enjoys continued upward mobility almost across the board.  Most U.S. children can expect to outgrow their parents economic status at the same rate as their European counterparts.  U.S. citizens experience no less upward mobility and no more downward mobility in the middle and upper classes.

What is surprising and upsetting about the U.S. mobility statistics is how hard it is for the poorest Americans to pull themselves up to a higher economic status.  Compared to European countries and Canada, the children of the lowest economic classes are much less likely to have upward mobility.  An American child born into a family in the lowest fifth of income brackets only has a one in three chance of reaching the lower middle class and only a 17% chance of reaching the upper middle class. Since every parent hopes and dreams of a better life for their children; it is heartbreaking that that dream is unattainable for so many families.

Winship also shared surprising data on economic equality in the United States.  Across the board, economic gaps aren’t growing among 99% of the population.  On the other hand, the economic gap between the top 1% and bottom 99% is growing dramatically.  The richest of the rich make hundreds times the income of the typical American family.

While the Great Recession is technically over, times are still difficult for lower and middle class families.  Financial security is far from reality for these families.  In 2010, one in five heads of households worried each month that they wouldn’t have enough money to put food on the table.  It is important that we take steps to promote economic growth for these families, so they can ensure that their children do even better.

Winship shared several suggestions to promote short-term economic growth and help these lower class families get back on track.  One of his suggestions was to direct more funds to private groups helping struggling homeowners and preventing more foreclosures and housing loss.  Protecting homeowners and promoting housing equality is a key part to speeding up economic recovery.

Unfortunately, Congress has not heeded the warnings of Winship and other experts on housing and economics.  In the wake of the recession, there has been a dramatic rise in home loss through foreclosure and homelessness.  The resources of shelters and housing non-profits have been pushed to their limits.  Instead of allocating more money to the U.S. Department of Housing and Urban Development for programs to prevent home loss and homelessness, Congress has drastically cut HUD’s budget.  The effect will be devastating. Without funding to support programs needed now more than ever to combat homelessness and housing discrimination, the overall economy will suffer as well.

For the poorest families who have to fight all odds to move up in the economic ladder, housing could be a key to success.  Supporting private housing groups who help protect struggling homeowners and renters would help promote better neighborhoods with more opportunities for poorer children and their families.

While many people in the United States enjoy privilege and wealth above and beyond their European and Canadian counterparts, our country is only as strong as its poorest families.  Winship suggests economic recovery can be sped up by taking a more positive outlook.  Many of the findings he shared might be more promising than we’d expect, but it is important to continue taking much needed steps to reform in the housing area.  Every American child deserves equal access to opportunity.

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