Income diversity within neighborhoods and very low-income families

The past decades have witnessed increasing concern over the family ills engendered by neighborhoods inhabited overwhelmingly by families with limited resources. This study focuses on a different sort of residential context—neighborhoods with substantial income mixing—and the extent to which very low-income (VLI) families—those earning less than 50 percent of the area median income (AMI)—live in them. The study’s primary units of analysis are the 100 largest metropolitan areas in the United States, according to the 2000 Census, and the secondary units of analysis are census tracts. The study specifies six mutually exclusive income groups based on the ratios relative to AMI, as defined by the U.S. Department of Housing and Urban Development. It also specifies four groups of neighborhoods according to their diversity of the six income groups, as measured by an entropy index. The descriptive results show that in 2000 (1) most neighborhoods had high diversity, although a decline is apparent in the overall income diversity of neighborhoods and in the share comprising high-diversity neighborhoods; (2) no neighborhoods with median incomes of less than 50 percent of AMI had high diversity; (3) 19 percent of all high-diversity neighborhoods (on average) consist of VLI families and 65 percent of all VLI families live in high-diversity neighborhoods, although both percentages have declined since 1970; (4) 5 percent of VLI families live in neighborhoods with median incomes of less than 50 percent of AMI, twice the percentage of 1970 but lower than in 1990; and (5) exposure of VLI families to other VLI families and moderate-income groups has steadily fallen since 1970 and concomitantly increased for families that have very high incomes (VHIs); indeed, the exposure to VHI families is approximately the same as exposure to other VLI families. This article addresses the mixed implications of these trends for the potential socioeconomic mobility of VLI families.