Economic Indicator: Opportunity Across The Nation & The Neighborhood

Over 2 years ago, the Navigator featured a post exploring the 2015 Opportunity Index, and today we are back with an update looking at the 2017 Opportunity Index. We explore how this type of opportunity-based research has continued to shape our knowledge of social mobility in the US – and, of course, how this affects economic and workforce development planning across states, counties, and local communities.  

As a reminder, the Opportunity Index is a measure used to quantify opportunity within each state considering four specific component areas:

  • Economy
  • Education
  • Health 
  • Community

Each component area receives an index score between 1 and 100, with 100 being the highest score, which is based on a variety of metrics, detailed in Table 1 to the right. Each state then receives an overall index score that considers all component scores.

Opportunity at the State Level

Across the US, the overall 2017 Opportunity Score is 52.4, which is an increase of 1.3 points from the score in 2016 (Opportunity Index Reports, 2016, 2017). Although our last article presented data from the 2015 index, we won’t explicitly consider changes between 2015 and 2017 because there were significant alterations in the composit​ion of the 2017 index, including the addition of a fourth component area, Health.

Since the inception of the index in 2011 Vermont has reigned supreme as the state scoring the highest overall, due in part to its very high score on Community. Conversely, the state with the lowest score is New Mexico, 40.9, for the third year in a row. Below is a list of the highest ranked states and their corresponding scores.

Opportunity at the Neighborhood Level

However, considering statewide data can be difficult because each state has distinct characteristics, varying populations, and different geographical boundaries including counties, towns, cities, and villages. Those areas, down to the smallest geographic level, do matter. New York State is a perfect example. NYS, home to Manhattan, is often referred to as the cultural, financial, and entertainment capital of the world and is the prime location for powerful institutions like the United Nations Headquarters and Wall Street. Manhattan has been referred to as the most economically powerful city in the world, and yet New York State scores particularly low in Economy, which is measured based on things like jobs, poverty, inequality, and housing. As a result, New York State ranks 17th on the Opportunity Index (not even in the top 10 states!). So, how can a state like New York, the place where dreams are supposed made of, rank so low? One explanation could be that these economic metrics vary widely across the state, and even across different parts of the city.

The recently published research paper The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility by Chetty et al. (2018) has garnered a significant amount of public interest. This study created an atlas of estimates that traced the outcomes of individuals, such as poverty and incarceration, all the way back to the specific neighborhoods in which children grew up (Chetty et al., 2018). The findings were staggering – not only does opportunity vary state-by-state, but certain social mobility outcomes, like income, vary significantly based on census tracts within counties and specific neighborhoods. Chetty et al. found that for children of parents at the 25th percentile of the income distribution, the standard deviation of mean household income at age 35 is $5,000 across tracts within counties (Chetty et al., 2018). In other words, they found a strong correlation between where children grow up, down to the census tract level, and their incomes later in life (Chetty et al., 2018).

The map shown above is an image from the interactive Opportunity Atlas (which you can find here: www.opportunityatlas.org - check it out and see how your neighborhood measures up). This map images shows household income in 2014-2015 for people born between 1978 and 1983 to low-income parents. The notable conclusion from the map image is that – areas shown in shades of red illustrate children who grew up in low-income households and stayed low-income into adulthood. Whereas, areas that are shown in shades of blue illustrate children who grew up in low-income households but generally had higher incomes into adulthood.

Another staggering finding, Chetty found that if a child moves out of a neighborhood with bad future prospects to a neighborhood with good future prospects, the move can increase lifetime earnings for low-income children by an average $200,000 (Ydstie, 2018).

Implications for Economic Development

Those who developed the atlas hope communities will leverage the data to both understand the challenges that prevent people from having better economic prospects, as well as generate strategic action plans for mitigating those challenges (Ydstie, 2018). Charlotte, N.C., was featured in story by NPR for leading the effort to mitigate their region-specific challenges. Although there was promising economic growth occurring within the city and people generally felt good about the city’s economic position, Chetty et al. released data showing Charlotte ranked last out of 50 US cities at providing upward mobility for low-income children (Ydstie, 2018). So, city officials decided to do something about it.

The first “win” was that the people of Charlotte discovered there were in fact barriers preventing people from having better economic outcomes; the second “win” was that the people of Charlotte took strategic action to combat these challenges. A task force was created to review the findings from Chetty et al. and brainstorm specific mechanisms to improve on these. They generated a report which identified factors that would need to be improved to generate better economic outcomes for children. These included things like more resources for early childhood development, college and career preparedness, and helping to support strong social networks. Because of this data and the following brainstorming, Charlotte officials are learning to use the data provided through the atlas to target improvements in certain programs (Ydstie, 2018).

Communities across the country can benefit two-fold from using data and interactive tools, like the Opportunity Index and the Opportunity Atlas. Communities can use the data to understand how their communities compare to others in terms of broad and specific comparisons. Additionally, communities can use the data to understand what improvements of services, programs, and other strategic additions need to be made for residents (or what things are going really well and deserve further expansion – right, Vermont?).

 


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