A new Federal Reserve report casts doubt on the conventional wisdom that neighborhood improvement hurts poor urban residents.
For many on the Left, gentrification remains a dirty word, synonymous—or at least closely associated—with racism, oligarchic developers, neoliberalism, and even genocide. Fortunately, not all gentrification-watchers are so dystopic. Less excitable observers harbor reasonable concerns about poor residents forced to resettle in blighted areas, unscrupulous landlords, and the disruption of familiar neighborhoods.
A just-released working paper from the Philadelphia Federal Reserve could shake up the conversation. Several previous studies have already cast doubt on the conventional wisdom that gentrification causes widespread displacement of poor, longtime residents. “The Effects of Gentrification on Well Being and Opportunity of Original Resident Adults and Their Children” goes further by recasting gentrification as a potential force for income integration and social mobility.
Unlike many previous studies, the paper, by Quentin Brummet of the National Opinion Research Center and Davin Reed at the Fed, is longitudinal, giving not just a snapshot of neighborhood residents but a picture over time—comparing education, income, and employment outcomes for residents who stayed in the changing neighborhood and those who moved. The authors were able to do this by compiling census data on the residents of low-income, central-city neighborhoods of the 100 largest metro areas in the U.S. in 2000 and comparing findings for the same people in the 2010-2014 American Community Survey.
The first surprise? Gentrification displaces very few people. An influx of college-educated residents into formerly lower-income neighborhoods—the accepted definition of gentrification—increases the probability that vulnerable, less-educated renters move to another neighborhood by about 3 percentage points. The effect on resident moves to a neighborhood at least one mile away is higher, at about 5 percentage points.
These findings demonstrate that gentrification has only a modest impact on displacement, debunking previous research that failed to consider just how dynamic urban neighborhoods are. Urbanites move a lot: 68 percent of less educated renters and 79 percent of more educated urban renters will haul their furniture to different lodgings over the course of a decade. That’s the case even where there are no latte-sippers snapping up nearby condos. The constant churning of the population means that gentrifiers are generally not forcing out locals so much as taking their place as they leave. The authors conclude that when the gentrifiers come, less educated residents—the most vulnerable ones—are only 10 percent more likely to move than they would have been if everything had stayed the same.
The bigger surprise is what happens to low-income residents who stay put compared with those who do move out. The stayers remain at the same poverty levels as before gentrification, but they see less poverty in their midst (the gentrifiers themselves see considerably more). Homeowners enjoy a big increase in their home values, enough to offset the inevitable rise in taxes. The authors also find, “somewhat surprisingly,” that rent increases for less educated residents remain much as they would have been if the gentrifiers had never arrived; educated stayers and newcomers, on the other hand, pay more. Most work on gentrification relies on median rents, but medians disguise considerable variation.
The paper’s most intriguing finding concerns gentrification’s effect on children. Kids living in gentrified neighborhoods see less poverty and more educated neighbors, and they develop more advantageous networks. Most strikingly, gentrification increases the probability that children of less educated homeowners will attend and graduate college. One of the most popular ideas for improving poor kids’ life chances is to move them into better neighborhoods. A well-known HUD policy experiment called “Moving to Opportunity” focused on doing just that. It didn’t change adults or children’s earnings or employment, but a more recent analysis by Harvard economist Raj Chetty found small, but significant, improvement in incomes, marriage rates, and education achievement for those who had moved at a young age. What this suggests is that gentrification is allowing less advantaged families to “move to opportunity”—without even moving.
The Fed paper can’t answer all objections to gentrification. Displacement and rent increases are likely to be a bigger problem in winner-take-all cities like New York and San Francisco than in less competitive markets. The biggest advantages accrue to less educated homeowners, who already enjoy a head start over renters in building capital. The paper doesn’t explore cultural tensions that disrupt neighborhoods as newcomers change the sights and sounds of what is, after all, stayers’ home turf. And, perhaps most important, the paper tells us nothing about the most disadvantaged kids in the most blighted areas—the poorest neighborhoods don’t gentrify at all.
Still, the upshot is that the gentrification discussion is ready for an upgrade. Far from intensifying inequality, gentrification helps to integrate low- and high-income populations and promote upward mobility, goals that anti-gentrification critics presumably support. More research is needed—but for now, how does the slogan “Gentrification for Social Justice” sound?