Residential Segregation on the Rise

A blog about business and economics.
Aug. 2 2012 1:29 PM

Residential Segregation on the Rise

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An interesting new study from Pew shows that America’s Census tracts are becoming more segregated by income. In other words, rich people are more likely to live in the same tract with a bunch of other rich people and so on and so forth.That follows on the heels of a bunch of other evidence that neighborhoods are becoming more homogenized along a number of dimensions. I’ve seen studies indicating that neighborhoods are much more likely to be overwhelmingly Democratic or overwhelmingly Republican.

This all has complicated social and political implications, but it seems like in many ways it’s good news for business and for everyday life. No matter who you are or where you live, there are only so many things you can be close to. Will it be a Chipotle or a Taco Bell? A Chick-fil-a or a Nando’s Peri-Peri? To the extent that people cluster, it’s easier for businesses to serve market niches rather than least-common-denominator tastes. And in specialized businesses, workers can be more productive—ringing up more dollars worth of sales per transaction and ultimately having the chance to earn higher wages.

That said, understanding of the particular phenomenon of segregation by income would probably benefit from more explicit consideration of age. The neighborhood where I grew up in Manhattan is now incredibly rich but also contains a fair number of NYU dorms. Those kids probably have very low annual incomes, but that's not at all the same as if the neighborhood contained the same number of poor adults. In social class terms, those NYU students fit right in with the rest of the post-gentrification neighborhood.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.