Tag Archives: wealth

“Naperville named wealthiest city in the Midwest”

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Add another distinction to those collected by Naperville over the last 15 years:

Naperville has been ranked the richest city in the Midwest in a list by personal finance website NerdWallet.

The city topped the region — and came in at No. 19 in the nation — in the rankings announced Monday…

NerdWallet rated cities with at least 65,000 people based on data from the U.S. Census Bureau, Zillow Research and credit bureau Experian.

In the Midwest, the runner-up — Carmel, Indiana — bested Naperville in only one category, with a median household income of $109,375, according to NerdWallet.

For its size – over 140,000 people – Naperville is unusually well-off with a high household income, a low poverty rate, and plenty of good white-collar jobs. There are certainly wealthier communities in the Chicago region and the Midwest but many of them are quite small and have little interest in growth.

How did Naperville get to this point? Two articles I have published help explain the suburb’s rise: a 2013 article in Urban Affairs Review that compares Naperville’s growth to West Chicago and Wheaton and a 2015 article in the Journal of Urban History that examines narratives about Naperville’s growth.

Sociologists provide limited hope for reversing inequality

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Several sociologists, among other experts, provides reasons for hope and despair regarding the shift where “inequality in America has been on the rise. The result is an alarming concentration of wealth among the country’s very well-off.” As they discuss reasons for hope, I was struck that the policy prescriptions provided by these experts tended to be limited: generally smaller programs (like Moving To Opportunity) or local efforts. This could be the result of several factors: maybe an online article this isn’t the sort of venue to get into large-scale policy discussions; perhaps academics aren’t great at operating in the world of policy as opposed to diagnosing problems; or the scope of study among these academics has tended toward smaller-scale studies. An area where some experts did see hope was in the social movement activity of recent years which has pushed some of these issues into the larger public conversation.

It would be fascinating to ask a broader range of sociologists this question and to get specifics from them on what gives them despair or hope. It can be relatively easy to point out large trends – such as concentrated wealth – but it is more difficult to discuss and push for feasible change. I’m also reminded that the period of less concentrated wealth that people often look to as a shining example – the post World War II era – was the result of particular large events that were difficult to foresee (a worldwide depression, the biggest war the world has ever seen) and responses to these changes.

When you spend $2 million to block a nearby McMansion

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The Washington Post profiles several neighbors who saved their neighborhood from a McMansion – but now may be on the hook for a big amount of money.

They had seen home after home in Bethesda, Md., torn down, replaced by behemoths boasting high ceilings, multiple gables and soaring porticoes. So when a small 1940s Cape Colonial on Oldchester Road was about to go on the market last year — and already attracting the attention of a well-known McMansion developer — three neighbors designed a custom-built approach to save it.

They pooled $2 million to buy, modernize and resell the old house. They hope the updated brick Colonial, which they expanded from three to six bedrooms, will preserve the charm of their neighborhood and maybe even make them a modest profit.

But the group’s attempt to flip the house — on a street where a 1999 Harrison Ford movie was filmed — has yet to pay off. The now-renovated home at 7812 Oldchester Road in the Bradley Woods neighborhood of Bethesda has been on the market since late August, its price having dropped from nearly $2.4 million to $2.175 million…

But the Bradley Woods triumvirate — a senior Justice Department official, a real estate lawyer and a high-end home designer — remain confident they made the right decision, despite the property lingering on the market for 3 1/2  months, longer than the two-month average for a Bethesda home.

What is missing in this story is the amount of money and wealth that is needed to even make this move: most Americans opposed to McMansions or other changes to their neighborhood or community could not simply buy the property and then try to make some money off of it. Instead, they have to either convince their neighbors that this isn’t in their best interest (and this is a tough case to make when so much money is on the line on what typically is most people’s biggest single investment in life) or go through the regulatory and legal process to attempt to block the teardown. All of this might lead to negative interactions as it pits property rights versus what the neighbors or community feel might be in their own best interests (and it often is about collective property values). But, if you have resources, you can just take care of the problem yourself.

A need to better measure financial support and wealth passed to Millennials

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A look at how race affects the financial support given by parents to Millennials includes this bit about measurement:

Shapiro said the numbers of Millennials receiving support from family are “absolutely underestimated” because many survey questions are not as methodical and specific as those a sociologist might ask. “As much as 90 percent of what you’ll hear isn’t picked up in the survey,” he said.

Shapiro’s more careful research found this:

Shapiro’s work pays special attention to the role of intergenerational family support in wealth building. He coined the term “transformative assets” to refer to any money acquired through family that facilitates social mobility beyond what one’s current income level would allow for. And it’s not that parents and other family members are exceptionally altruistic, either. “It’s how we all operate,” Shapiro said. “Resources tend to flow to people who are more needy.”

Racial disparity in transformative assets became especially striking to Shapiro during interviews with middle-class black Americans. “They almost always talk about financial help they give family members. People come to them,” Shapiro said. But when he asked white interviewees if they were lending financial support to family members, he said, “I almost always get laughter. They’re still getting subsidized.”…

To many Millennials, the small influxes of cash from parents are a lifeline, a financial relief they’re hard pressed to find elsewhere. To researchers, however, it’s both a symptom and an exacerbating factor of wealth inequality. In a 2004 CommonWealth magazine interview, Shapiro explained that gifts like this are “often not a lot of money, but it’s really important money. It’s a kind of money that allows families to obtain something for themselves and for their children that they couldn’t do on their own.”

Two quick thoughts:

  1. Americans tend not to like to talk about passing down wealth but decades of sociological research (as well as research from others) shows that it happens frequently and is quite advantageous for those who have wealth passed to them. I recommend looking at Shapiro and Oliver’s book Black Wealth/White Wealth.
  2. Polls like those cited here from USA Today could lead to lots of problems just because the measurement is not great. Why not ask better poll questions in the first place? I understand there are likely limits to how many questions can be asked (it is costly to ask more and longer questions) but I’d rather have sociologists and other social scientists handling this rather than the media.

“How [residential] segregation destroys black wealth”

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A recent New York Times editorial highlights the ongoing effects of residential segregation:

Despite being better qualified financially, black and Latino testers were shown fewer homes than their white peers, were often denied information about special incentives that would have made the purchase easier, and were required to produce loan pre-approval letters and other documents when whites were not.

Moreover, real estate agents enforced residential and school segregation by steering home buyers into neighborhoods based on race. Whites were encouraged to live where the schools were mainly white; African-Americans where schools were disproportionately black; and Latinos where schools were disproportionately Latino…

This history of discrimination has taken an enormous toll on black wealth, as is shown in research by Douglas Massey and Jonathan Tannen at Princeton University’s Office of Population Research. In 1970, two years after the passage of the Fair Housing Act, for example, the average well-off black American lived in a neighborhood where potential home wealth, as measured by property values, stood at about only $50,000 — as opposed to $105,000 for affluent whites and $56,000 for poor whites.

By 2010, affluent African-Americans had passed poor whites in potential home wealth but had fallen further behind affluent whites. There is more than money at stake, Mr. Massey and Mr. Tannen write, because home values “translate directly into access to higher quality education given that public schools in the United States are financed by real estate taxes.”

From de jure to de facto segregation. The resources of the past went to white suburbia and the deck is still often stacked against black and Latino urban residents. And the wealth differences are large and this has consequences for subsequent generations.

This editorial appears to be motivated by a recent housing discrimination complaint. This reminds me of the conclusion of American Apartheid where the authors argue that although the United States has the laws on the books that would even out housing opportunities, we often lack the political will to enforce them. This book was published over twenty years ago and there appears to be truth to it still today…

Naperville named safest American city over 100,000 people

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Niche.com recently named Naperville the safest American city:

The rankings were based on evaluations from 215 cities with populations of more than 100,000 residents and included analysis of the city’s violent and property crime data, including murder, assault, robbery, burglary, larceny and vehicle theft rates.

Niche, a Pittsburgh-based ranking and review web site, used the 2013 FBI Uniform Crime Report “Crime in the United States,” an annual publication that reports the number and rate of violent and property crime offenses. They then used a formula to determine the city’s safety ranking, which includes weighting the crime by category: murder rate at 30 percent; assault and robbery at 20 percent each; and burglary and larceny at 10 percent each.

Two Naperville officials are quoted in the story praising crime prevention efforts. This helps but my guess regarding the bigger factor is the wealth of the community. According to the latest (2013) Census estimates: Naperville has a median household income of $108,302, the poverty rate is 4.1%, and the percent of residents with a high school degree is 96.5% and 65.9% have a bachelor’s degree. There are plenty of wealthy communities in the United States but they tend to be smaller. Once you get cities bigger than 100,000, it is hard to find many that have the number of educated and wealthy residents as Naperville.

Studying poor neighborhoods alongside “Racially Concentrated Areas of Affluence”

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Scholars in recent decades have spent a lot of time studying neighborhoods with concentrated poverty but what about those areas of concentrated wealth?

Cities such as St. Louis, Boston, Baltimore, and Minneapolis have more racially concentrated areas of affluence (RCAAs) than they do racially concentrated areas of poverty (RCAPs). Boston has the most RCAAs of the cities they examined, with 77. St. Louis has 44 RCAAs, and 36 RCAPs. Other cities with a large number of racially concentrated areas of affluence include Philadelphia, with 70, Chicago, with 58, and Minneapolis, with 56.

In Boston, 43.5 percent of the white population lives in census tracts that are 90 percent or more white and have a median income of four times the poverty level. In St. Louis, 54.4 percent of the white population lives in such tracts…

Public policy has “focused on the concentration of poverty and residential segregation. This has problematized non-white and high-poverty neighborhoods,” said Goetz, the director of the Center for Urban and Rural Affairs at the University of Minnesota, when presenting his findings at the Lincoln Institute of Land Policy. “It’s shielded the other end of the spectrum from scrutiny—to the point where we think segregation of whites is normal.”…

In racially concentrated areas of affluence, federal dollars come in the form of the mortgage-interest deduction. In areas of poverty, they come through vouchers and subsidized housing units. In the Twin Cities, the total federal investment in the form of housing dollars in RCAAs was three times larger than the investment in RCAPs. On a per capita basis, it was about equal.

Federal dollars are now being spent to “subsidize racially concentrated areas of affluence,” Goetz said.

Three quick thoughts:

1. Sociologists studying such topics may not spend enough time studying elites and the wealthy. This could be for a variety of reasons: those with power and money can limit access (hence moving to smaller exclusive communities or compounds or towers of the uber-wealthy); sociologists tend to be middle to upper-class themselves; poverty presents a more visible social problem compared to the shadowy actions of those with money and influence.

2. Suburban scholars have long noted the government support for wealthier areas. The American suburbs came about partially due to certain cultural values (individualism, private property, racism) but may not have been possible on such a grand scale without federal money for mortgages (as the industry was altered in the first half of the early twentieth century), highways (interstates as largely paid for by the federal government), and diverting money away from cities to suburban areas.

3. From a policy perspective, is it easier to move those in poverty to wealthier areas (though programs like Moving to Opportunity) rather than encouraging the wealthy to move to less advantaged areas? Policy sometimes gravitates to solutions that seem doable (as opposed to what might be most effective in the long run) and I imagine the wealthy really don’t want to move to areas with more poverty.

 

Loss of housing wealth hits black suburbanites hard

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The housing and economic crisis of the last decade has hit black suburbanites particular hard:

But today, the nation’s highest-income majority-black county stands out for a different reason — its residents have lost far more wealth than families in neighboring, majority-white suburbs. And while every one of these surrounding counties is enjoying a strong rebound in housing prices and their economies, Prince George’s is lagging far behind, and local economists say a full recovery appears unlikely anytime soon…

The recession and tepid recovery have erased two decades of African American wealth gains. Nationally, the net worth of the typical African American family declined by one-third between 2010 and 2013, according to a Washington Post analysis of the Federal Reserve’s Survey of Consumer Finances, a drop far greater than that of whites or Hispanics…

Not only is African American wealth down, but the chances of a quick comeback seem bleak. Just over a decade ago, homeownership — the single biggest engine of wealth creation for most Americans — reached a historic high for African Americans, nearly 50?percent. Now the black homeownership rate has dipped under 43?percent, and the homeownership gap separating blacks and whites is at levels not seen in a century, according to Boston University researcher Robert A. Margo…

Many researchers say the biggest portion of the wealth gap results from the strikingly different experiences blacks and whites typically have with homeownership. Most whites live in largely white neighborhoods, where homes often prove to be a better investment because people of all races want to live there. Predominantly black communities tend to attract a narrower group of mainly black buyers, dampening demand and prices, they say…

Scholars who have studied this dynamic and real estate professionals who have lived it say the price differences go beyond those that might be dictated by the perceived quality of schools, or the public and commercial investment made in particular neighborhoods. The big difference maker, they say, is race.

In other words, simply promoting homeownership – a key part of the ideal of the American Dream and also something taken as a sign that various groups have made it – is not the complete answer for thinking about equality among different groups. What homes people own and where they are located also matter. Decades of research in urban sociology and related areas shows that blacks and other minorities often don’t live in the same suburban settings as white suburbanites. Their homes tend to be located in poorer neighborhoods and neighborhoods that have higher non-white populations. This is due to a variety of reasons including long-term white wealth that gives whites better opportunities to move to wealthier and whiter places, zoning practices in wealthier communities that tend to limit cheaper or affordable housing (examples here and here), mobility patterns among whites that show they leave neighborhoods and communities as they become more non-white (the process of “white flight” continues in some suburban areas), and patterns of mortgage lending as well as renting that tend to take advantage of poorer and non-white residents. Tackling the issue of residential segregation still matters today even as more minorities and poor residents move to the suburbs.

 

Siblings dealing with an in-family wealth gap

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Inequality by wealthy doesn’t just occur across groups or families – it can be an issue within families.

Experts see a growing trend. The same forces that have increasingly separated the richest Americans from everyone else is dividing brothers and sisters, too. It’s given rise to a mix of often conflicting emotions, jealousy and resentment, disappointment and distance, but also frequently understanding and respect…

As the wealth gap has widened, some mental health professionals say they’ve seen more patients for whom such a divide has become a personal issue.

In 35 years practicing psychotherapy, Janna Malamud Smith says she’s never had so many clients troubled by sibling wealth. The complaints have grown so familiar to her she can riff on them without pause…

A decade ago, sociologist Dalton Conley produced research suggesting that income inequality in America occurs as much within families as among them. Yet the similarities tend to end there. With siblings, “you had pretty much the same advantages and disadvantages growing up,” he says, so big difference in wealth can feel like a judgment on intelligence or drive.

How Americans feel about the wealth gap within their families shapes how they feel about it nationally, whether or not they see it as an inequity that must be addressed, says Lane Kenworthy, a sociologist at the University of California, San Diego…

Poll results suggest that many Americans feel the same way. Asked in October by Pew Research to name the most important reason for the wealth gap, 24 percent chose “some work harder than others,” more than tax policies, foreign trade or the educational system.

One review of Conley’s book The Pecking Order suggests Conley isn’t surprised to find inequality in the home:

Conley takes an opposing view, saying, “The home is no haven in a harsh world—it both creates and reflects that world” (p. 112). The problems of capitalism, racism, sexism, and bigotry that hinder and hurt people in society are the same ills that trickle unnoticed into the home.

This reminds me of Marx’s suggestion that the first exploitation occurred in the family. Also, this hints at the micro-level effects of broader conversations about inequality. It is one thing to have public discussions about the 1% or .01% but it is another to come face to face with these differences within your own family. How often do these kind of close interactions between unequal persons happen? Given our propensities to gather with people like us in our social networks plus the durability of social class in shaping our tastes and life chances, it may not be that often. Hence, the uniqueness of a show like Undercover Boss where the head of the company interacts with the average worker. Perhaps this means we need a show called Unequal Families…

The first McMansion nursery rhyme?

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I see a lot of material about McMansions but have never read a nursery rhyme about such homes. Here is the first I’ve seen:

As I was trading up on spouses, I became a man with SEVEN houses
Each house has seven acres,
Each acre has seven servants,
Each servant makes $7,
Acres, servants, dollars and spouses,
Why are the underclass such grouses?

There is not a whole lot here regarding the specifics of McMansions outside of vague ideas about wealth and seeing such homes as deserved. These are ideas often tied to McMansions but could apply to a broad range of big houses (such as mansions rather than McMansions) or even big-ticket consumption items.

I’m not the one to write such things but I imagine someone could come up with a better nursery rhyme involving McMansions…