The American Interest
Analysis by Walter Russell Mead & Staff
The Shale Boom and Income Mobility

e_rank_b_hybrid_continental

A fascinating map of American income mobility has been making the blogging rounds today. The map is based on a study that the NYT notes is being hailed as “the most detailed portrait yet of income mobility in the United States.” The study found that metro areas with greater income heterogeneity had greater social mobility. Gawker used the findings to sing the praises of public transportation, and Matt Yglesias found that the results confirmed his own belief in the merits of mixed-income neighborhoods. But there’s another factor at play here: America’s shale boom.

If you haven’t already, take the time to look at the interactive map over at the New York Times, and if you’re so inclined, read David Leonhart’s insightful analysis of the study. Looking at that NYT map, we can see that North Dakota and eastern Montana are the most upwardly mobile areas in the country. It’s no coincidence that those blue shaded areas overlap the Bakken formation, one of the largest shale oil and gas plays in the United States. And energy-rich Texas, home to the oil-rich Permian basin and the Eagle Ford shale formation, is also relatively upwardly mobile.

There are certainly more factors at work here than the energy industry alone, but the relatively remote Bakken area’s top-dog mobility status leads us to believe that shale’s transformative power is at play here. This, then, is just one more reason to be thankful for our country’s embrace of the new energy source. Had we followed “green” Europe’s example and rejected shale over dubious environmental concerns, we’d likely have a lot less income mobility out in the Midwest.

[Map of income mobility courtesy of Equality of Opportunity]

Published on July 22, 2013 2:55 pm
  • bpuharic

    The study’s authors found that the leading factors were how well the poor were dispersed among middle class neighborhoods, quality of schools, having 2 parents, etc. But notice how poorly red model states do, in spite of ‘right to work’ laws, low govt regulation, etc.

    • wigwag

      What the map shows is that with the exception of Virginia (which currently benefits from its proximity to our nation’s Capitol) and Texas (America’s Saudi Arabia) all of the former Confederate states lag the former Union states in economic mobility. This isn’t too surprising given that Southern red states almost all have significantly lower GDPs per capita than northern blue states.

      Outside of the states with energy resources, few places in America match New York City and Boston in terms of facilitating upward economic mobility.

      I was waiting for Professor Mead to post about this article and am not surprised that he was anxious to put a spin on it that confirmed his preexisting inclinations; its not particularly honest, but the temptation always proves irresistible to pundits.

      As the article itself points out, the associations documented by the study tell us absolutely nothing about causation. An analysis of regional variations in economic mobility and the reasons for them would be very complicated.

      Professor Mead’s inclination to announce that the study verifies that he was right about fracking all along is just as banal as the willingness of others to use it as evidence that blue states are better than red states or that Texas and the Dakotas are smarter than the other 47 states combined.

      Unfortunately that’s what passes for intelligent commentary today, even at a generally intelligent site like Via Meadia.

      • Andrew Allison

        Actually the study tells us absolutely nothing (see response to foobarista above). Might I also gently suggest that if you find Prof. Mead’s posts as objectionable as your comments seem to indicate, you refrain from reading, or at least commenting on, them.

      • PostLiberal

        few places in America match New York City and Boston in terms of facilitating upward economic mobility.

        Please inform us how those born and raised in Roxbury, Harlem, Ocean Hill Brownsville etc do with regard to income mobility. Inquiring minds want to know.

        • wigwag

          If the report is to be believed, apparently they do considerably better than residents of a similar socioeconomic class who live in cities in the Old South.

    • Andrew Allison

      Please try and keep that jerky knee under control. What the study found was, “These
      differences are modestly correlated with variation in tax expenditure policies across areas, but much variation in children’s success across areas remains to be explained.” In other words, the study was just another meaningless waste of time and money.

      • Fred

        Don’t worry about it. I understand completely. B. is an exceptionally talented troll. If his comments were just stupid or just obnoxious or just arrogant, he’d be easy to ignore, but the way he combines them has the same affect as itching powder.

      • ThomasD

        Why the creator(s) of the maps chose to use distinct colors is a bit of a mystery. The range of values is from low single digits to low thirties, values that could have easily been visualized through shading of a single, or possibly two colors.

        But then the ‘contrast’ wouldn’t appear nearly so strong.

        • Andrew Allison

          I think that if they had used two colors the message, namely that your family is in poverty and you live in the South or on the coasts, you’re in trouble, would be very clear.

  • Brian

    What the studies authors didn’t do is compare the cost of living between states/metropolitan areas.

    According to money.cnn.com’s cost-of-living calculator, the earnings in the upper 1/5 percentile the authors stated ($107,000) in NYC, is the same as a $46,693 salary in Atlanta Georgia.

    http://money.cnn.com/calculator/pf/cost-of-living/

    More cherry picking from the NY Times, but then again, what else is new?

    • Andrew Allison

      That was not the purpose of the study (see above).

      • Fred

        Maybe not, but it does seem relevant. Neither math nor statistics is my forte, but to my naive untrained eye, it seems that if someone in NYC and someone in Atlanta start at the same salary, say 30K, and some specified amount of time later, the person in NYC is making 107K and the person in GA is making 50K, the worker in NYC is going to register as having greater economic mobility while in real terms their economic mobility has been the same. What am I missing?

        • Andrew Allison

          First, that it’s a study of the income mobility of children; second that it showed only modest correlation to tax expenditures (i.e., that whatever else tax expenditures may be doing, they’re not helping kids to escape poverty); and third that if and when the kids are employed, their starting salaries would not be the same.

          What the map shows is that, for whatever reason, kids in the center of the country have a better chance of escaping poverty than those in the South and on the coasts. The authors of the study can’t explain this, and everybody has their own ideas. Regards,

          • Fred

            Ah. Thanks.

      • ThomasD

        Perhaps not, but it is a valid concern.

        Consider the young person from the Pikeville, KY area. If he stays in the area, and does fairly well – making ~ $60k a year, he doesn’t qualify as a high earner, but will be able to afford a decent middle class lifestyle.

        In contrast, if he moves to Newark NJ in order to make $70,001 a year he ‘looks’ like a winner but in reality will have much lower disposable income and will get much less house for his money.

        A transformation of the chart values – adjusting for regional cost of living – would not be terribly complex, but would be highly informative.

        An overlay showing areas by relative income inequality (a big bugbear of the progressives) would also be informative.

        • Andrew Allison

          Maybe, but the study under discussion is of children’s chances of escaping poverty ;<)

          • ThomasD

            Then why the focus on being a “high Earner” ($70k)?

            If poverty was the issue then why didn’t they use the Federal poverty standards (which are regionally adjusted)?

            The authors were just featured on NPR, and, in their own words, the issue under study was income mobility, not poverty.

          • Andrew Allison

            Please read my response to foobarista above, which quotes directly from the abstract of the study.

  • http://foobarista.blogspot.com foobarista

    Did they follow people over time or did they just look at areas? If they looked at areas, you’ll have an obvious bias toward places like NYC and Silicon Valley with lots of high-paying jobs to begin with. If they tracked particular people over time (which it doesn’t look like they did), you’d notice that, for example, poor native-born Californians tend to leave California and move to cheaper places, while immigrants and strivers tend to move here and get jobs in tech, etc.

    I also wonder how this looks if the “immigrant striver effect” is normalized out? 2nd-gen immigrants almost always do better than their parents (particularly children of people who immigrated as adults), and they tend to live on the coasts or in Texas.

    • Andrew Allison

      “Building on our previous research on
      the EITC, we study the impact of tax expenditures on intergenerational
      mobility. We find substantial variation in the economic outcomes of
      children from poor families across areas of the United States. These
      differences are modestly correlated with variation in tax expenditure
      policies across areas, but much variation in children’s success across
      areas remains to be explained.”
      In other words, yes.

  • Anthony

    Isn’t study originally based on tax expenditure benefitting intergenerational mobility? Equally, didn’t study find only modest correlation? As some have mentioned, variables underlying income mobility may be hard to quantify but Texas and Dakota energy ‘boom’ are currently worth mentioning as conditions for those states.

    • Andrew Allison

      You are absolutely correct. This was a disappointing post.

  • ThomasD

    Looking at the various maps one can’t help but notice that their are islands of red in the sea of beige in many western States (the Dakotas, Montana, Arizona, New Mexico.) That these areas also happen to be the locations of Federal Indian reservations is no coincidence.

    Once can argue about the forces and factors involved in creating those islands of immiseration, but they clearly do not include the private market.

    • Andrew Allison

      Great observation! Taking out the Indian reservations would make the overall pattern even more clear.

  • slbeef

    The map appears to be much more correlated to demographics than shale oil. Areas with higher percentages of non white populations have lower income mobility.

  • Homeros

    I’m quite comfortable with numbers and statistics.

    I’m skeptical that this marvelous study tells us anything at all. It’s just a bunch of numbers and arbitrary categories. But what does it say?

    That there is a fair amount of income mobility in the US, but it varies for many reasons?

    I think we already knew this.

    If it doesn’t provide insight into causation, and can’t be used for prediction, then it is useless, just more blue state model blather that tries to reduce human beings to interchangeable atoms.

    As Donald Kagan memorably pointed out, because human beings have souls and free will, the social sciences can never be real sciences, and never achieve stable conclusions. This study, just a lot of work measuring arbitrary locations and arbitrary definitions of income status (no one thinks about his income quintile in real life). It contains almost no useful information, as far as I can see.

    • bpuharic

      The same holds true, I suppose, for Harvard economist Greg Mankiw’s assertion that the 1% are rich because of genetic superiority…