Escaping the wealth gap can mean fleeing hometowns

AP News
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Posted: Nov 10, 2014 2:57 PM
Escaping the wealth gap can mean fleeing hometowns

DANVILLE, Ill. (AP) — This Illinois city already was struggling when Tara Holycross and her friends were kids riding their bikes to Custard Cup, swimming at the park district pool and hanging out in the Wendy's parking lot.

Manufacturers that provided thousands of well-paying, middle class jobs — General Motors, General Electric, Hyster — were closing. Neighborhoods were crumbling. By the time Holycross graduated from high school in 2004, a city best known for its massive downtown grain elevator and as the hometown of actors Dick and Jerry Van Dyke was scrambling to create new opportunities.

Ten years later, this city of 32,500 still is struggling. But Holycross and some of her classmates are doing just fine — because they moved.

They're doctors and athletic trainers, software specialists and financial advisers. They're living all over the country — from Chicago to Charleston, South Carolina, to Boulder, Colorado — where they found solid jobs that reward the kind of education they have. Though still early in their careers, they've surpassed Danville's median household income of $35,000 and expect to do much better. Holycross and four classmates interviewed said about half of their class of fewer than 50 left town, and those they're in touch with landed good positions.

"I knew there wasn't an opportunity for me to have my career" in Danville, said Holycross, 28, a third-generation native who now works as an athletic trainer for a hospital system in Beloit, Wisconsin, about 90 miles northwest of Chicago.

Their experience is a counterpoint to the desperation gripping so many rural and manufacturing communities in the Midwest that have been hard hit by global economic changes. The flow of educated workers from struggling communities to areas with brighter job opportunities might, to some extent, help shore up the U.S. middle class, which has been squeezed by a widening gap between the richest Americans and everyone else.

Since roughly 1980, income has grown most for the top earners and dropped for the poorest 20 percent. Incomes for the highest-earning 1 percent of Americans soared 31 percent from 2009 through 2012, after adjusting for inflation, according to data compiled by Emmanuel Saez, an economist at University of California, Berkeley. For everyone else, it barely budged, rising an average of 0.4 percent.

While Wall Street traders and software CEOs soared to enormous affluence, waves of people fell out of the middle class as manufacturing's share of the economy shrank. Following the downside arc of the wealth gap was inevitable for many who stayed in stricken factory towns where jobs disappeared. For others, though, escaping meant separating their own fate from that of their hometowns.

Between 2012 and 2013, more than 26.7 million people age 18 and over moved — 17.3 million of them to a different county. Those in their 20s and 30s with a college degree were most likely to move for job reasons and to move the farthest. In that period, people poured out of declining cities like Detroit, whose population dropped by almost 10,000, and into economic hotspots like San Antonio, which grew by 25,378, according to census data.

The trend of more-educated people moving and less-educated staying began to emerge several years ago. A Census Bureau study found that more than half of highly educated workers who moved between 2005 and 2010 left their counties. By contrast, 70 percent of people without high school diplomas who moved did so within the same county.

Decades ago, many unskilled workers were able to migrate to capitalize on better conditions elsewhere, as when field workers moved from the South to the Midwest for factory jobs after World War II.

But good blue-collar jobs are now harder to find anywhere — one factor that may help explain why mobility overall has been declining for several decades and why it dropped sharply during the recession.

"If we pushed someone who's stayed in Detroit to suddenly hit the road and move to Chicago, would that person suddenly do better? Or has that person stayed behind exactly because he or she can't find a good-paying job in Chicago?" said Danny Yagan, a University of California economist who studies mobility.

There's no comprehensive data contrasting the financial fortunes of those who have stayed in place and those who have left. But the partial glimpses available are revealing.

A survey of nearly 3,000 2012 graduates of 15 public universities in Michigan — a state especially afflicted by manufacturing's decline — found that 37 percent were living in another state a year later. That was down from 49 percent in a similar 2007 survey. But those who did move were far more likely to have a full-time job: 86 percent compared with 68 percent of those who stayed put. And they tended to earn significantly more.

Those who moved from Michigan to Illinois upgraded from a state median income below $47,000 to one over $55,000 in 2012. Research indicates that people who moved to places with stronger economies often do about as well as the workers already there. Less clear is whether such a move translates into more overall wealth or a better lifestyle.

"There's a lot more to learn," Yagan said.

Differences in living costs can make moving chancy. But they aren't always a negative factor. People who left California during the recession for bustling San Antonio, riding an oil boom and technology expansion, often accepted pay decreases but were better off overall because of Texas' lower costs, said Asa Sphar, managing partner of the CSI Executive Search firm. The median value of a home in California is nearly $384,000; in Texas, it's $128,000.

In Danville's case, the low cost of living wasn't enough reason for many to stay. Holyfield said she and her husband, an electrician who grew up near Danville, found better job prospects around the Chicago exurbs and hope to buy a house soon.

Also, "there is just way more to do up here — whether it's concerts or restaurants or shopping," Holyfield said.

Danville's population has dipped by about 1,000 residents in the past 20 years. Many of its new residents are lower-income people seeking cheap housing. The poverty rate has reached 29 percent, compared with 18.1 percent in 2000.

Warehousing and distribution centers have replaced some of the manufacturing jobs. Local businesses are funding scholarships for students who agree to stay home after graduation.

But vacant and dilapidated homes scar big chunks of neighborhoods, the historic downtown still has scores of vacant buildings and unemployment is almost 10 percent. City officials are hoping legislators allow the city to build a casino to bring in more jobs.

"It's taken a long time to stabilize, and it will take years before we start moving in the next direction," said Mayor Scott Eisenhauer.

The situation is much the same in Flint, Michigan, where about 80,000 once worked in GM factories, but where the population has dropped from 200,000 to below 100,000 since most of those jobs dried up. Mayor Dayne Walling said his town's master plan now includes razing entire neighborhoods.

Struggling towns are emphasizing college and trade school to many young people, hoping that a higher-quality workforce will attract employers yet also aware that education makes it easier for young people to leave.

For Stephanie Shinn Gaydos, a 2004 high school graduate from Danville who now practices medicine in Charleston, South Carolina, moving back to Danville isn't an option.

"That's a shame because I'm close to my family," she said, "but I am so happy with the opportunities (in Charleston). It doesn't really compare."