Low-income Austin children have poor economic prospects in contrast with low-income UT students

This story was written for J339T: Mapping in Storytelling, Spring 2017.

Travis County may be one of the worst in the nation in terms of upward mobility, but if Austin students can make it to the University of Texas they have a much better chance of improving their economic situation, according to a new study.

The research, the latest from Stanford University  researcher Raj Chetty’s Equality of Opportunity project, uses tax data to track the financial path of graduates from colleges across the US.

On average, American college grads from poor families have a 34.3 percent chance of working their way up to the top income quintile. UT Austin, Texas’ second-largest public university, beats the national average by 10.2 percentage points, better than every public school in Texas except its old rival Texas A&M. For perspective, a person at the the bottom income quintile makes around $30,000 in a year. Top-quintile earners receive more than $100,000 per year.greenwithextraarrow

 

This finding stands in stark contrast with data on the Travis County area, where income mobility numbers are bleak. An average child from a low-income family in Travis County has only about a 4.5 percent chance of reaching the top income quintile, compared to the national average of 7.5 percent.

Chetty and his team of economists have been investigating upward mobility, or the ability of a person to move from a lower to a higher income level, since 2012. A 2014 study examined the effect of location on a child’s financial success. The statistic used in the study is the same as in the college study: ”success rate,” or the percent of children from low-income families who end up earning salaries in the top income quintile.

The main takeaway of the study? The American Dream is attainable on average—but may only be feasible in certain parts of the country.

Benny Goldman, a predoctoral fellow working on the project, affirms that Travis County’s mobility statistics are poor.

“There are some cities like San Jose and Minneapolis where that number is like 12 or 13 percent so…(Travis County’s) number is quite low,” Goldman said.

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Chetty’s research continued in the following years with studies on different aspects of economic mobility in the US. One of the team’s more recent endeavors took the previous geographical research a step further–instead of simply measuring the flat-rate chance of a child from a certain county reaching the top quintile, it actually calculates how much of this difference is caused by the county.

In the study, called “The Effects of Neighborhoods on Intergenerational Mobility,” the researchers found tax data for families who had moved from county to county, and worked out a statistic to measure how much each year spent growing up in a county affects a child’s income in the future.

For each year of childhood (for the purposes of this study, childhood lasts from birth to age 20) an Austin child loses 0.46 percent of income per year at age 26. If a poor child spends their entire childhood in Travis County, their salary at age 26 will be $1,960 lower. In other words, parents who move to Travis County aren’t doing their children any favors.

Why does Travis County fare so poorly? Correlations found in the recent study suggest that the answer may be found east of I-35. Austin’s racial demographics are notoriously clumped. Ask any Austinite, and they will give you a breakdown of the city by which racial group lives where.  

Minorities are increasingly forced, by gentrification and rising property taxes, further from the downtown area and into low-income pockets of the city. Some residents are even pushed out of the city limits altogether. The city’s black population declined by 5.4 percent, a loss of 3,500 people, from 2000-2012, according to census data. The data shows that these families often move to cheaper suburbs like Pflugerville, according to an analysis by the Austin American-Statesman examining Austin’s segregation problem.

Goldman said segregation and its associated issues could be one contributing factor to Travis County’s low economic mobility.

“When we look nationally at the causal effects of place across different counties, we find that the correlations of causal effect of place are things like segregation, income inequality, local school quality, measures of social capital and family structure,” Goldman said.

Austin’s segregation and wage gaps, and their effects on the school systems and neighborhoods of the city, could very well contribute to Travis County’s low mobility rates. But Goldman, like any good statistician, knows that correlation does not equal causation.

“What we don’t actually know is if segregation itself is causing outcomes to be poor,” he said. “All we really know is places that tend to do really well tend to be places that have a lot of racial mixing, and places that tend to have very poor outcomes are places that don’t tend to have a lot of racial mixing.”

Goldman suggested that possibly Austin’s racial divide could be a symptom of a deeper problem.

“Maybe segregation is just a signal of something underlying or structurally different about a place that would cause kids who live there to have poorer outcomes when they are adults,” he said.

Goldman said the Equality of Opportunity Project researchers plan to focus future studies on finding out more about the statistical impact of factors such as segregation, education and wage gaps on children’s financial outcomes.

“The next frontier of this research is figuring out, the places that do really well, what exactly are they doing to provide these outcomes for kids?” Goldman said. “Is it something about school quality? Is it something about different neighborhoods? Is it something about local programs? We simply don’t know quite yet.”

 

 

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