Tag Archives: inequality

Leader who does not like “Mayor 1 percent” label joins Wall Street investment firm

Posted on by

Former Chicago Mayor Rahm Emanuel does not like one of the names applied to him during his mayoral tenure:

Dellimore also pressed Emanuel on the “Mayor 1 percent” tag that has dogged him for years, a nickname critics use to tie him to wealthy supporters and downtown development they say he favors at the expense of struggling outlying neighborhoods.

Emanuel first responded by taking a swipe at wealthy Blackhawks and United Center owner Rocky Wirtz, who has publicly ripped Emanuel for raising entertainment taxes at big venues such as the United Center: “Go ask Rocky Wirtz what he thinks about being part of the 1 percent.”

When Dellimore said the criticism comes from poor and working-class neighborhoods that feel like they’ve been left behind while the Loop and adjoining neighborhoods have boomed under Emanuel, the mayor changed tacks. He defended investments downtown.

“You name me one world-class city in the world with a decaying central business district,” Emanuel said. “Name one. They don’t exist. I’m proud that we have a thriving, successful central business district that gives us the revenue to also fund from 14 to 33,000 kids in summer jobs.”

Few local governments would argue that downtown development is a bad thing. After all, growth is good and stagnation or decline is terrible.

Yet, if a leader wanted to counter an image of working for the wealthy or the better-off neighborhoods in a city, would joining a Wall Street investment firm be a good next move?

Former Chicago Mayor Rahm Emanuel is joining the Wall Street investment firm Centerview Partners LLC, whose leaders include long-time friends and campaign donors…

“Rahm’s leadership and vast experience providing strategic advice, coupled with a track record of successful planning and execution, will bring tremendous value to our firm and our clients,” Effron said. “Establishing a presence in Chicago is a logical next step for Centerview as we continue to grow, and it positions us to better serve existing and new clients throughout the Midwest.”…

Emanuel on Wednesday rejected any notion that his work as mayor affected the hiring…

Emanuel previously spent more than two years as a Chicago investment banker at Wasserstein Perella & Co., from 1999 to 2002, a job he took after serving as a top aide to President Bill Clinton.

So perhaps this is little surprise given Emanuel’s track record as mayor and roles prior to becoming mayor. Or, maybe he thinks providing commentary for The Atlantic and ABC News will help balance out or help people forget about the Wall Street work.

Predatory contracts took $3-4 billion from blacks in Chicago

Posted on by

A recent study looked at the financial cost of contract buying for two decades for black homeowners in Chicago:

Black families in Chicago lost between $3 billion and $4 billion in wealth because of predatory housing contracts during the 1950s and 1960s, according to a new report released Thursday.

The Samuel DuBois Cook Center on Social Equity at Duke University and the Nathalie P. Voorhees Center at the University of Illinois-Chicago sought to calculate the amount of money extracted from black homeowners on the city’s South and West sides from home contract sales. The report is titled “The Plunder of Black Wealth in Chicago: New Findings on the Lasting Toll of Predatory Housing Contracts.”

Contract buying worked like this: A buyer put down a large down payment for a home and made monthly installments at high interest rates. But the buyer never gained ownership until the contract was paid in full and all conditions were met. Meanwhile, the contract seller held the deed and could evict the buyer. Contract buyers also accumulated no equity in their homes. No laws or regulations protected them.

Home contract sales were a ruthlessly exploitive means of extracting capital from African Americans with no better alternatives in their pursuit of homeownership, the report said. Contract loans were rampant all over the West Side — in East Garfield Park, West Garfield Park and North Lawndale — but also in Englewood on the South Side.

The key here is that wealth generated through homeownership is the sort of asset that gets passed down over time and helps build intergenerational wealth. Many Americans today rely on this same logic: owning a home is a significant investment to draw on later in life. That wealth then enables other possibilities, such as education or moving or acquiring other goods. This long-term wealth goes far beyond the benefits a homeownership has while living in that home; the wealth enables possibilities for future generations.

As one study puts it:

If public policy successfully eliminated racial disparities in homeownership rates, so that Blacks and Latinos were as likely as white households to own their homes, median Black wealth would grow $32,113 and the wealth gap between Black and white households would shrink 31 percent. Median Latino wealth would grow $29,213 and the wealth gap with white households would shrink 28 percent.

Earlier public policy decisions and social practices can have long-term consequences, even decades later.

What can you tell about a person from their neighborhood?

Posted on by

When I read the news that The College Board is expanding its use of an “Adversity Score” with the SAT (including measures of “the crime rate and poverty level of the student’s neighborhood”), I immediately thought of a basic sociological question that is part of the discussion of the new methods: just how much does a neighborhood or location shape a person?

A few pieces of evidence:

1. A particular location shapes access to numerous resources from jobs to certain neighbors to local services and amenities to schools to certain political structures. Hence, residential segregation has significant influence on life chances.

2. Marketers seem to make a lot of zip codes. For example, Esri has a tool that divides American locations into certain slices:

Just head to the website, type in your zip code, and you’ll be greeted with a breakdown of your zip code’s demographic characteristics based on Esri’s “Tapestry” technology, which consists of 67 unique market segment classifications.

More:

But more than that, the database is a fascinating glimpse into how marketers see the world, and how data profiles can link populations in distant cities—or not. Though cities like Portland, Oregon, and Austin, Texas, might be compared culturally, their marketing profiles are fairly distinct. And while the majority of consumers in Beverly Hills share a profile with those on Philadelphia’s Main Line, for example, they don’t match up with the profile for residents of similarly expensive zip codes on Manhattan’s Upper East Side.

3. Wealthy people seem to use their zip code as a marker for who they are. Getting to help determine who can live in the community or neighborhood is a desirable goal in many places.

At the same time, not everyone in a particular community or location has the same experience. Yet, locations are very formative for people even as they exercise some agency in responding to local conditions or making choices to move elsewhere.

Separating the ills of suburbia from the ills of the United States

Posted on by

The critiques of the American suburbs are common and persistent. But, how many of them are unique to the suburbs as opposed to multiple American settings or American society as a whole? A thought experiment with a number of the ills of suburbia:

  1. Consumerism. Present everywhere with displays of wealth such as expensive housing, cars, and technological goods alongside just having a lot of stuff. Certain suburban symbols may catch attention – such as McMansions and SUVs – but these are present all over the place. Excessive or wasteful consumption is not solely an American problem.
  2. Sprawl. This may seem like a uniquely suburban problem. Yet, numerous American cities have varying levels of density and lots of single-family home neighborhoods (even if these homes are closer together).
  3. Driving. Suburbs may be more dependent or designed around automobiles but so are most American cities and urban neighborhoods. And  rural areas would be very different without widespread access to cars.
  4. Conformity. Mass culture is everywhere, even if cities are often regarded as having more diversity and cultural experiences. This is related to consumerism as many Americans are thoroughly immersed (just see the figures on how much media Americans consume a day).
  5. Inequality. Across categories of race, class, and gender, American communities of all kinds experience problems. They may manifest differently in each context but addressing inequality in the suburbs would not solve the problem in the entire country.
  6. Lack of true community. Social ties seem to be more tenuous across the United States as a whole and the influence of and trust in institutions of all kinds has declined. Americans are famously individualistic, whether in suburbs or other settings.

Another way to think about it: did these problems begin in suburbs or are they amplified or exacerbated by suburbs? Imagine the United States where only 30% of American lived in suburbs: might driving and sprawl still be an issue? Would the problems of inequality be alleviated?

Rahm Emanuel on what divides people and how art can bring people together

Posted on by

Toward the end of an interview about the arts during his tenure as Chicago mayor, Rahm Emanuel briefly discussed factors that divide people and bring them together:

I think Lori and Amy know that the arts are the soul of a great city. Martin Luther King used to say the most segregated day in America is Sunday. The arts can make the other six days more integrated. Technology is balkanizing and dis-aggregating people. Only a government working with artists can create equity across shared experience.

According to this short quote, two factors work against community:

  1. Religion. Watch MLK make his 1960 statement about the most segregated hour in Christian America. So if religion in the US has tended to divide people by race (see Divided By Faith) and Chicago is one of the most segregated cities in America, Emanuel may have a point about this in Chicago.
  2. Technology. Emanuel could join a chorus of pundits and scholars who argue technology has detrimental effects on community life.

On the other hand, Emanuel cites two forces that encourage community:

  1. Art/the arts.
  2. Government helping to facilitate the work of artists.

There is little doubt that major cities in recent decades have used the arts and cultural experiences alongside public art to try to drive growth. Whether this truly enhances community in the long run, particularly when other forces at work – with Emanuel’s reference to equity, I can’t help but think of uneven development and capital investment in cities like Chicago – work against community, remains to be seen. In other words, can shared experiences overcome persistent social inequalities?

The late 2000s “global economic meltdown” and values of McMansions

Posted on by

One columnist connects the economic crisis of the late 2000s and McMansion values:

Perhaps you thought the last decade’s global economic meltdown, which crushed stock prices and McMansion values, would most hurt the wealthy. Nope. The gap between rich and poor in the U.S. expanded in the aftermath of the Great Recession. The (sarcastic) good news: America’s wealth gap expanded less than Bulgaria’s between 2010 and 2017.

Three quick thoughts:

  1. McMansions are often cited as a symptom of the problems that led to the economic crisis and housing bubble of the late 2000s. The spirit of consumption in the United States with lenders providing more and more risky loans (and not recognizing the problematic loans and then selling and buying them as if they were good investments) plus decisions by consumers to purchase more and acquire debt all contributed to the larger issues. If you needed one symbol of excessive consumption from the early 2000s, commentators often go for the McMansion or the SUV.
  2. While the McMansion became an important symbol, housing prices almost across the board declined precipitously. Not just McMansions were affected. And since most American single-family homes are not McMansions, it seems a bit odd to single them out here. Many Americans who would not or could not purchase McMansions felt the effect of declining property values.
  3. Housing construction declined during and stayed depressed for a number of years after the economic crisis. Even during this down time, builders continued to construct McMansions. And once the economy started to pick up, more McMansions appeared. While the economic trends certainly affect how many McMansions go up, the style of home has some staying power. Even if such homes helped contribute to the economic crisis, some Americans still want to build and buy them. The value of such homes may not be the only reason people build and buy them.

Could giga-mansions relieve the negative attention directed toward McMansions?

Posted on by

The term McMansion is likely to stick around (even if is used poorly at times) but more interest may be shifting to the giga-mansion.  A Motley Fools podcast provides some information:

First we had mansions. Then we had mega-mansions. And McMansions. Now we have giga-mansions. Yes, it’s a growing trend of massive houses usually built in the LA area on spec. They are massive, expensive, and outrageously ostentatious. Let’s see if you two can answer some trivia around some of the most expensive pieces of residential real estate on the market…

The One will be America’s largest house on the market at 100,000 square feet. It will be the most expensive private residence when it comes to market. It boasts four swimming pools, a nightclub, a room where the walls and ceiling are filled with jellyfish. It will have a 30-car gallery. Because of this price you don’t call it a garage. Of the 20 bedrooms, how many are in a separate building just for your staff?…

Let’s move on and talk about the house called Billionaire. It’s 38,000 square feet. It was America’s most-expensive house on the market when it was listed for $250 million in 2017. The property is in the exclusive Los Angeles suburb of Bel Air. It has 12 bedrooms, 21 bathrooms, three kitchens, a 40-feet James Bond-themed cinema, six bars, two fully stocked champagne cellars, and the helicopter from what 1980s television series? Rick knows this. He can’t wait to say it…

Southwick: A $1 billion lot. Now we’re going to go to The Manor. The largest home in LA was actually built in 1988 by the TV show producer Aaron Spelling and his wife Candy. The 56,000 square foot, 14-bedroom, 27-bath home originally was built for $12 million. They sold it all in a cash deal for $85 million in 2011 to the 23-year-old daughter of someone wealthy. Don’t worry about it. She renovated much of the house, since it had some very quirky spaces, including a flower-cutting room, a humidity-controlled silver storage room, a barber shop, and three rooms for doing what common birthday and Christmas activity?

One of the major critiques of McMansions involves their symbolic nature: they are associated with sprawl, wealth, and conspicuous consumption. All of these appear to be in play with the examples from the Los Angeles area cited above: a region known for cars and highways, entertainment celebrities and executives along with other wealthy people, and a constant need to stand out from the rest of the area.

But, McMansions have key differences from this supersized homes. They are generally smaller – roughly 3,000-10,000 square feet – and more often found in “typical” neighborhoods. They are often mass-produced. They are often criticized for their architecture while megahomes take more flak for their size. Perhaps most importantly, McMansions are within the reach of more Americans. Depending on the housing market, an upper-middle class household can acquire a McMansion but these giga-mansions are only for the wealthiest.

If the ultimate concern behind critiques of McMansions is their unnecessary size and flaunting of wealth, then the spread of giga-mansion might relieve some of the pressure. Granted, there will always be more McMansions but it is easy to focus on these outsized homes and their owners. Why criticize the top 10-20% of American homeowners for their McMansion choices when the giga-mansions of tomorrow constructed and owned by the top 0.1% of homeowners are so ridiculous and unnecessary?

Fire-resistant homes, private firefighters, public goods, and inequality

Posted on by

Perhaps designing a home that can hold off wildfires is not the best way to go. Instead, just hire your own team of firefighters:

As multiple devastating wildfires raged across California, a private firefighting crew reportedly helped save Kanye West and Kim Kardashian’s home in Calabasas, TMZ reported this week. The successful defense of the $50 million mansion is the most prominent example of a trend that’s begun to receive national attention: for-hire firefighters protecting homes, usually on the payroll of an insurance company with a lot at risk.

The prominence of celebrities in the story may attract controversy but the use of private firefighters is part of a larger trend:

The National Wildfire Suppression Association represents 250 private wildfire-fighting companies, who provide on-demand services to federal, state, and local governments. Budget cuts have forced privatization onto the Forest Service, as the NWSA itself explains. “The emergence of private contract resources—national and regional 20-person firefighting crews, engines, dozers, tenders and other specialized equipment, and support services such as caterers and shower/handwashing units—gives agencies the flexibility they need to increase or decrease support with the most cost effective solution,” the NWSA media backgrounder says.

While Americans generally think certain public goods should be available to all or many (though this is notably missing in certain areas, such as a right to housing), those with wealth often can access different options or better versions of what the public can use. A historian puts it this way:

“Are the present examples (Kanye West et al.) the thin end of a wedge that will lead to the wealthy buying better services in all these realms: education, policing, healthcare, firefighting?” Bailey wondered. “Or are we already a long way down this path?”

I wonder if Americans feel differently about natural disasters, sometimes termed “acts of God.” It is hard for anyone to completely prepare or defend against major disasters including flooding, hurricanes, tornadoes, earthquakes, and fires. The wealthy can rebuild and recover more easily but only so much can be done in these situations. This differs from more typical goods or public services people can access where we have much less conversation about buying into higher levels of service or quality.

Researchers say half the world is middle class or higher

Posted on by

A new report suggests a majority of humans are middle class or above:

For the first time since agriculture-based civilization began 10,000 years ago, the majority of humankind is no longer poor or vulnerable to falling into poverty. By our calculations, as of this month, just over 50 percent of the world’s population, or some 3.8 billion people, live in households with enough discretionary expenditure to be considered “middle class” or “rich.” About the same number of people are living in households that are poor or vulnerable to poverty. So September 2018 marks a global tipping point. After this, for the first time ever, the poor and vulnerable will no longer be a majority in the world. Barring some unfortunate global economic setback, this marks the start of a new era of a middle-class majority.

We make these claims based on a classification of households into those in extreme poverty (households spending below $1.90 per person per day) and those in the middle class (households spending $11-110 per day per person in 2011 purchasing power parity, or PPP). Two other groups round out our classification: vulnerable households fall between those in poverty and the middle class; and those who are at the top of the distribution who are classified as “rich.”

The consequences could be interesting:

Why does it matter that a middle-class tipping point has been reached and that the middle class is the most rapidly growing segment of the global income distribution? Because the middle class drive demand in the global economy and because the middle class are far more demanding of their governments…

In most countries, there is a clear relationship between the fate of the middle class and the happiness of the population. According to the Gallup World Poll, new entrants into the middle class are noticeably happier than those stuck in poverty or in vulnerable households. Conversely, individuals in countries where the middle class is shrinking report greater degrees of personal stress. The middle class also puts pressure on governments to perform better. They look to their governments to provide affordable housing, education, and universal health care. They rely on public safety nets to help them in sickness, unemployment or old age. But they resist efforts of governments to impose taxes to pay the bills. This complicates the politics of middle-class societies, so they range from autocratic to liberal democracies. Many advanced and middle-income countries today are struggling to find a set of politics that can satisfy a broad middle-class majority.

There are multiple issues to consider here: how all of this is measured, whether the majority is relatively evenly spread across countries or is concentrated in certain areas, and what this might bring.

But, I will point to another feature of this study: it suggests relatively good news. For much of human history, larger-scale collectives – from kingdoms to empires to countries – have consisted of some elites, perhaps a limited middle class, and a larger poor and working-class population. If these figures are true, more people have access to resources and opportunities to do things.

This would fit nicely with some materials I have heard in recent years about a good amount of good news about the global system. On one hand, there are still major problems and sizable poor and vulnerable populations (the less well-off half in this study). On the other hand, global health is improving, economic conditions on the whole are improving, violence is down (in relative terms), and people around the world may be paying attention to the plight of others like never before.

Perhaps this is why even Google has ways of providing some of good news. Even if much news revolves around problems, there is plenty of good news to find.

Divorce down, marriage down, telling a full story

Posted on by

Recent sociological work highlights how looking past the initial findings – divorce rates are down in America – reveals a more complicated reality:

In the past 10 years, the percentage of American marriages that end in divorce has fallen, and in a new paper, the University of Maryland sociologist Philip Cohen quantified the drop-off: Between 2008 and 2016, the divorce rate declined by 18 percent overall…

The point he was making was that people with college degrees are now more likely to get married than those who have no more than a high-school education. And the key to understanding the declining divorce rate, Cherlin says, is that it is “going down some for everybody,” but “the decline has been steepest for the college graduates.”

The reason that’s the case is that college graduates tend to wait longer to get married as they focus on their career. And they tend to have the financial independence to postpone marriage until they’re more confident it will work. This has translated to lower rates of divorce: “If you’re older, you’re more mature … you probably have a better job, and those things make it less likely that you’ll get into arguments with your spouse,” Cherlin says…

Chen connects this trend to the decline of well-paying jobs for those without college degrees, which, he argues, makes it harder to form more stable relationships. Indeed, Cohen writes in his paper that marriage is “an increasingly central component of the structure of social inequality.” The state of it today is both a reflection of the opportunities unlocked by a college degree and a force that, by allowing couples to pool their incomes, itself widens economic gaps.

It would be interesting to see how many of those who might celebrate the finding that divorce rates are going down also discuss the reasons linked to financial stability, education levels, and inequality.

Take more conservative Christian churches as a possible example. Evangelical Protestants are often proudly in favor of marriage (between a man and a woman). They work hard to provide programs for families as well as classes and sermons about marriage and family life. They would generally be opposed to divorce or at least view it as less than ideal. But, having conversations about how marriage is less attainable for some Americans or the evolving idea that one needs to be financially independent before marrying might be less common. How often do topics of social class and inequality come up from the front in many congregations? Or, discussions could turn to why Americans do not make correct individual choices rather than focusing on social pressures and structures (financial independence, it is more acceptable to cohabit) that influence all Americans (including conservative Christians). Ultimately, the findings may not be that good for evangelicals: divorce is down because Americans are getting married less and cohabiting more. If they want to encourage more marriage, they would have to respond to these larger social forces at work.