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Nearly a decade ago, Harvard researcher Raj Chetty released a report that said Charlotte was 50th out of 50 of large American cities for economic mobility. That meant a child born into the lowest income tier had less chance of rising out of poverty — and into the highest income tier — in Charlotte than in any other major metro. The study was based on analyzing millions of tax returns nationwide from children born around 1980.
The report embarrassed Charlotte.
Pledges were made. Task forces were formed. Hundreds of millions of dollars were invested in public-private partnerships like the $250 million Mayor’s Racial Equity Initiative, and the Charlotte Executive Leadership Council's Executives in Residence program.
The study was updated this July with a second group of children, born in 1992.
Black Americans born into poverty nationwide showed particularly large gains. And Charlotte showed some of the biggest progress in improving economic mobility among large cities. It’s still in the bottom half, but is now 38th on the list.
No one can say for sure why.
This newsletter will explore some of the reasons floated for Charlotte doing better — and whether any of them fully make sense. (Spoiler alert: Few of them do.)
But first, here is a look at a map of economic mobility from the first Chetty study.
The red areas have low economic mobility. They correlate highly with where Black Americans live, showing the legacy of slavery and Jim Crow:
Here is a map showing the change in income in adulthood for Americans born to low-income parents in 1978 versus 1992:
In this map, the red areas are again bad, showing little improvement. The blue areas — including Charlotte — showed the most.
So what happened?
Is it anything Charlotte did?
After the first Chetty study, Charlotte scrambled to respond.
But the programs enacted in Charlotte after the first study came too late to impact anyone in the second group of children studied.
We can rule those programs out.
Sherri Chisholm, who leads a Charlotte group called Leading on Opportunity that was created in the wake of the 50 out of 50 ranking, said recently that Charlotte’s gains were likely due to public-private partnerships around the 1990s and 2000s.
She said nonprofits did a good job transitioning people from the textile industry to banking, or jobs supporting the banking industry. She also cited past organizations like the African American Agenda and Charlotte Agenda for Children.
Since Chisholm works in the nonprofit space, it’s not surprising she would cite the work of nonprofits in lifting people up.
Maybe that helped, but there’s still a lot to explain.
Among the 50 cities in the study, Charlotte ranked third out of 50 for its progress with economic mobility. In other words, it had the third-highest percentage change in adult income (measured at age 27) for people born to low-income parents in 1978 versus 1992.
Presumably other cities also had nonprofits trying to uplift low-income residents.
And rural parts of the country — such as the Mississippi Delta — showed bigger gains in mobility than Charlotte.
The Delta saw individual incomes rise by 29% for its poorest residents from the children in the first study to the second. Charlotte saw incomes rise only 15%.
Did the Mississippi Delta have public-private partnerships as well? If so, how did they produce more improvement than Charlotte?
Perhaps the answer lies, in part, with bank CEOs Hugh McColl and Ed Crutchfield, who led NationsBank and First Union on a spree of mergers and acquisitions in the 1980s and 1990s that concentrated wealth in Charlotte. (Chisholm’s answer depends on this.)
Maybe that allowed low-income Charlotteans born in 1992 to make bigger gains than those born in the late 1970s.
But the idea of McColl and Crutchfield being a driving force doesn’t really explain things fully, either.
Memphis, Nashville, Austin and Grand Rapids, Mich., saw gains larger or roughly the same as Charlotte.
Nashville and Austin saw their overall economies boom in the '90s and '00s.
Memphis and Grand Rapids? Not as much.
National and international trends?
In an online presentation last week, Chetty’s message was that communities could be proactive, able to impact mobility on their own. The slides in his presentation called for governments to “provide social capital” and to “focus on social communities within neighborhoods.”
But later in the discussion, Chetty shifted away from that message, saying that improved economic mobility was likely due to large-scale policy changes.
“It can’t just be random things happening in one place and not the other,” he said, noting that the ability of incomes of the poorest Black children to rise out of poverty rose nationwide, while the ability of white children to do so fell across the board.
(White adults born into poverty still make more money than Black adults from low-income families.)
The slides in his presentation didn’t mention sweeping national or international trends — perhaps because much of his audience of nonprofit leaders and philanthropists don’t want to hear that economic mobility is largely out of their control.
Charlotte leaders have been eager to hear from Chetty. He gave a talk in Charlotte last year. UNC Charlotte paid him $50,000 and first-class airfare for a November seminar he led, according to the Charlotte Ledger.
A conservative explanation
During the same online discussion, one of the panelists, Robert Doar, of the conservative American Enterprise Institute, offered another possibility: Bill Clinton’s welfare reform in 1996.
A key part of the Republican’s “Contract with America,” the Personal Responsibility and Work Opportunity Act, was designed to move people from welfare to work. It’s impossible to know if it led to better economic mobility for Black Americans, but its passage and implementation coincided with a period where low-income African Americans did better than they had in previous years.
Being from a conservative think tank, it’s not surprising that he would push a conservative viewpoint.
But if welfare reform is the cause, it doesn’t appear to have helped low-income white Americans, plenty of whom had been on government assistance.
It’s possible it was a mix of factors: Welfare reform. Negative impacts of the North American Free Trade Agreement.
And that the American South — and Charlotte — boomed economically, bringing more opportunities to where the majority of Black Americans live.
An even more simple explanation
I am not an economist.
But I can read maps.
If you look at the two maps again from above, they are almost an exact opposite. Areas that were red in the first study are blue in the second.
Perhaps areas where low-income residents did better in the first study didn’t have room to grow their incomes in the second study.
If low-income wages in one area are already more than average, the labor market may adjust — raising other people’s incomes to reach yours.
Here is one more set of maps, from Maine.
The first is from the first Chetty study, for children born around 1980. As you can see from the green and blue colored counties, Maine is a place of relatively high economic opportunity for low-income children. There are only two counties with low mobility (shaded in orange and yellow).
Now here is a map from the second Chetty study showing the change in individual income from the first study to the second.
Red and orange areas showed little gain. Green areas showed improvement. Blue areas showed the most.
Areas that were red in the first map are now blue or green. Areas that were blue or green are now red or orange.
Are we to believe that the county in the middle of the state — Piscataquis — had found a secret sauce for mobility in the 1980s, but then abandoned it in the 1990s and 2000s?
Or that Washington County on the Canadian border was a place of little economic mobility, but then enacted a series of policies to lift up its poorest residents?
What’s next for Charlotte
Charlotte Mayor Vi Lyles told the Charlotte Business Journal last week that the second report validates the city’s efforts.
“This is absolutely good news,” Lyles said. “On the list of things we needed to do, we accomplished a lot of them.”
It appears the city did this without ever knowing there was a problem.
