Landmark New Study Shows PA Regions ‘Upwardly Mobile’

Posted by on August 05, 2013

View the briefing paper online at http://keystoneresearch.org/upwardmobility.

For help accessing data (for your region and comparison areas), or identifying civic leaders in your area focused on mobility, contact Dr. Stephen Herzenberg at 717-805-2318 or herzenberg@keystoneresearch.org.

Landmark New Study Shows PA Regions ‘Upwardly Mobile’
New Data on What Works a Crushing Indictment of ‘Southern Strategy’

A new study by a team of top economists shows that Pennsylvania enjoys substantially more upward mobility than many other parts of the United States — with Pittsburgh near the front of the pack among the 30 most populous regions and many other parts of the commonwealth doing as well or better.

“Pennsylvanians need to take a careful look at this fresh evidence on what works at the state and regional level to make the American Dream a reality,” said Dr. Stephen Herzenberg, an economist and Executive Director of the Keystone Research Center (KRC). “Pennsylvania’s high ranking for upward mobility reflects a robust middle class, quality K-12 education, healthy civic engagement, and strong families.”

The study by economists Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez breaks new ground by providing the most detailed information yet on upward mobility in different regions across the nation. Most of Pennsylvania enjoyed upward mobility comparable to Denmark and Norway, while Atlanta and a five-state Southern region reflected upward mobility substantially below that in any other rich country. Below are some key findings from the study:

Pittsburgh ranked fifth among the 30 largest U.S. metro areas when it comes to children born into low-income families growing up to earn top incomes as adults. Pittsburgh kids born into families in the lowest-income fifth (parental income below $25,000 per year) had a 10% chance of making it into the top fifth. Philadelphia ranked 19th on this measure, with an 8% chance.
Pittsburgh did even better in terms of opportunity at the top end of the scale, ranking first measured by the probability of children from families in the top fifth (incomes over $107,000 a year) ending up in the top fifth by age 30 — 38%. Philadelphia ranked fourth out of 30 on this measure, with 36% of children from top-fifth families making it into the top fifth as adults. Thus, children in the top fifth have about four times as much a chance of making it into the top fifth in Pittsburgh as do children in the bottom fifth, while this same ratio is nearly five in Philadelphia, seven in Cincinnati, and seven-and-a-half in Atlanta.
In all 12 Pennsylvania regions, children whose parents’ income fell in the bottom fifth had a 7.7% to 12.9% chance of reaching the top fifth. This percentage is two to three times higher in Pennsylvania regions than in the parts of the country with the least upward mobility, such as Atlanta and Charlotte. (KRC’s briefing paper has tables with indicators of mobility for each of Pennsylvania’s 12 regions.)
In these same 12 Pennsylvania regions, average incomes of low-income 30-year-olds — who grew up at the 10th percentile — fell in the 36th to 44th percentile range. This compares with the 30th and 31st percentile in Atlanta and Charlotte.
Five Pennsylvania regions in the study — St. Marys, Altoona, State College, Williamsport, and Scranton — ranked even higher on indicators of mobility than Pittsburgh. St. Marys, for example, has an unusually large middle class, with 70% of children growing up in families with incomes between the U.S. 25th and 75th percentiles.
Virtually all parts of three southern states, North Carolina, South Carolina, and Georgia, and most parts of two other southern states, Alabama and Mississippi, have low mobility. Across the entire country, only a few pockets in the Midwest and isolated regions in the rest of the country had as little intergenerational mobility from the bottom to the top fifth as this southern region.

The researchers undertook this study to explore how the level and progressivity of taxes impacted mobility. They found that several tax variables correlated positively with intergenerational mobility, including the level and progressivity of tax expenditures and state earned income tax credit policies. (Pennsylvania does not have a state earned income tax credit.)

While cautioning that more research is needed on the factors that expand opportunity, the researchers identified four variables that correlated with upward mobility: the size and dispersion of the middle class; the quality of K-12 schools; strong families, measured by the share of two-parent households; and civic engagement.

In the 1996 to 2011 period of this study, Pennsylvania’s newly diversified economy and its middle class stabilized after the harrowing decade of the 1980s. In addition, the Ridge and Rendell Administrations increased state education funding, the first targeting rural regions and the second lower-income urban areas. Pennsylvania has low divorce rates, strong philanthropic organizations in many regions, and a relatively strong labor movement.

“This study provides powerful new evidence of what works to sustain the American Dream of widespread mobility,” said Dr. Herzenberg. “The old strategy of low wages, shrinking government, and failing to invest in quality education has stunted economic opportunity. Pennsylvania’s regions offer a model for a better approach.”

Pennsylvania should not rest on its laurels but continue to deepen dialogue about how to broaden opportunity, Dr. Herzenberg said, adding: “Pennsylvania regions need to focus like a laser on how to maintain a robust middle class, good schools for all, strong families, and civic engagement.”

At the state level, Pennsylvania’s policymakers need to take a different direction. “Pennsylvania recently has slashed education funding for low-income communities, seen its economic recovery sputter and middle-class struggle, and sought to suppress civic engagement through a voter ID law,” Dr. Herzenberg said. “Some in the legislature want to go further, with a so-called right-to-work law and additional steps to divorce electoral outcomes from voters’ preferences. We now have the facts on the likely impact of this old, low-wage strategy: it will move Pennsylvania to the bottom of the upward mobility rankings.”

View the briefing paper online at http://keystoneresearch.org/upwardmobility.

The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy. Learn more: http://www.keystoneresearch.org.