A Leg Up: World's Largest Cities No Longer Homes of Upward Mobility


Throughout much of history, cities have served as incubators for upward mobility. A great city, wrote René Descartes in the 17th century, was “an inventory of the possible,” a place where people could lift their families out of poverty and create new futures. In his time, Amsterdam was that city, not just for ambitious Dutch peasants and artisans but for people from all over Europe. Today, many of the world’s largest cities, in both the developed and the developing world, are failing to serve this aspirational function.

Though leading urban theorists love to celebrate the most rarified parts of the city economy—Saskia Sassen refers to “urban glamour zones” that thrive in what New York Mayor Michael Bloomberg proudly calls the “luxury city”—they tend to forget about working- and middle-class residents. Unfortunately, these urban ideas appear to be contagious, as they’re being applied to the expanding cities of Asia and other developing regions. A recent World Bank report argued that large urban concentrations—the denser, the better—are the most prodigious creators of opportunity and wealth. “To spread out economic growth,” the report claimed, is to discourage it.

A closer look, however, suggests a more nuanced reality. Cities in the developing world are growing, but largely because they’re the only alternative to poverty and even starvation in the countryside. These cities are not only failing to provide opportunities for upward mobility; they’re producing the class inequalities found in “luxury cities” such as London and New York.

Once rigidly egalitarian, China now has some of the world’s highest rates of income inequality. The central cores of Beijing and Shanghai employ legions of well-paid European and American architects and planners, but few concern themselves with the camps inhabited by poor, often temporary workers, who constitute roughly one-fifth of the population and live in conditions more reminiscent of a Brazilian favela than an “urban glamour zone.”

This same stratification is also happening in India. Mumbai, one of the fastest-growing cities, is creating wealth at the top of the economic spectrum but leaving millions of others scrambling for mere subsistence. The New York–based author Suketu Mehta has described his hometown of Mumbai (formerly known as Bombay) as “an urban catastrophe,” an example of the mounting woes of rapidly expanding cities in the developing world. “Bombay is the future of urban civilization on the planet,” he wrote. “God help us.”

A majority of Mumbai’s population now lives in slums, up from one-sixth in 1971—a statistic that reflects a lack of decent affordable housing, even for those gainfully employed. Congested, overcrowded, and polluted, Mumbai has become a difficult place to live. The life expectancy of a Mumbaikar is now seven years shorter than an average Indian’s, a remarkable statistic in a country still populated by poor villagers with little or no access to health care.

In spite of World Bank proclamations, the most rapid urban growth in India is actually occurring in smaller, less dense cities, such as Bangalore and Ahmedabad, places with lower living costs and more business friendly governments. This mirrors a trend occurring in the United States. In the last decade, middle-income people have been moving out of our megacities. Between 2000 and 2008, according to the demographer Wendell Cox, regions of more than ten million people suffered a 10 percent rate of net domestic out-migration. (Often the only reason for population growth in these cities was immigration.) The big gainers were cities between 100,000 and 2.5 million residents: the business-friendly Texas cities Dallas, Houston, and San Antonio; Raleigh and Durham, North Carolina, which now form the fastest-growing metro area in the nation; and the heartland cities of Columbus, Indianapolis, Des Moines, Omaha, Sioux Falls, and Fargo.

One reason for this movement has been the shift of jobs away from the coasts to lower-cost, less dense cities. The fastest growth in middle-income jobs has been concentrated in many of the places listed above: Houston, Dallas, Austin, Raleigh-Durham, and Salt Lake City. This pattern also includes high-tech, science-oriented employment. In contrast, those jobs have been stagnant or shrinking in such cities as New York, Los Angeles, San Francisco, and Chicago.

As a result, America’s largest cities are increasingly divided into three classes: the affluent, the poor, and the nomadic class of young people who generally come to the city for a relatively brief period and then leave. New York, the aspirational city of my grandparents, now has the smallest share of middle-income families in the nation, according to a recent Brookings Institution study, with Los Angeles and San Francisco not far behind. In 1980 Manhattan, New York’s wealthiest borough, ranked 17th among U.S. counties for social inequality; by 2007 Bloomberg’s “luxury city” was first, with the top fifth earning 52 times the income of the lowest fifth, a disparity roughly comparable to that of Namibia.

Similar patterns can be found in Europe, despite its countries’ more developed welfare states. The U.K. has witnessed a relentless centralization of urban functions in London, as once proud cities such as Manchester, Liverpool, Glasgow, and Birmingham have continued their long slide into obscurity and irrelevance. The bulk of London’s growth, however, has not taken place in the central core but in what the historian James Heartfield calls “the greater southeast.” This vast “conurbation” stretches from west of Heathrow Airport to the booming coastal city of Brighton, roughly an hour’s train ride from the“ city center.

As the middle class has decamped, central London has become more stratified. Residents and workers there and in the West End account for some of the most concentrated wealth on the planet. At the same time, prospects for London’s middle class have weakened, with many fleeing to the suburbs or even leaving the country. (Britain remains a large exporter of educated workers to the rest of the world.) The major issue here is the high cost of housing. Even in its poorest neighborhoods, London now ranks as one of the most unaffordable places for middle-income people to buy a home.

Still, life is much tougher for the city’s poor, many of whom live less than an hour’s walk from the wealthiest neighborhoods. Take a stroll just a mile or two from the Thames and you enter a very different London. It is here where you’ll see why the financial capital of the European Union also has the highest incidence of child poverty in Great Britain (more even than in the beleaguered North East). Thirty-six percent of children in London live in poverty, a figure that rises to more than one-half when the city’s housing costs are factored in.

The same split has emerged in other countries considered far more open than class stratified Britain. A recent University of Toronto study found that between 1970 and 2001, the portion of middle-income neighborhoods in the city had dropped from two-thirds to one-third; poor districts had more than doubled to 40 percent. By 2020, middle-class neighborhoods could fall to less than 10 percent, with the balance made up of poor and affluent residents.

Much the same can be seen in continental Europe, a trend greatly exacerbated by the growth of immigration. Unlike Amsterdam in Descartes’s time, Europe’s great cities are failing in their historic mission of incorporating newcomers, as German Chancellor Angela Merkel recently conceded. In Berlin, one fourth of the workforce earns less than 900 euros a month, while 36 percent of children are poor. The city once known as “Red Berlin” has emerged as “the capital of poverty and the ‘working poor’ in Germany,” Emma Bode, a left-wing journalist, wrote in 2008.

Given these global realities, it might be time for our urban boosters to curb their enthusiasm for the “luxury city” and refocus on how to meet the aspirations of their middle- and working-class residents. If they don’t, lack of opportunity will drive more and more of this crucial aspirational class farther and farther away, mostly to smaller cities and suburbs that still offer “an inventory of the possible.”

This piece originally appeared in Metropolis Magazine.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

Photo by Premshree Pillai

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Nicomaco, I totally agree

I totally agree with what you mentioned in regard to NIMBYism filtering. I live in a Bay Area town that has had regulations on the books that essentially restricts building of all new housing since the 70's. As a result all of the housing stock in town are older homes thus there is a limited supply of housing. Even after the bust the prices of homes throughout the Bay Area are hovering at nosebleed levels.

I also don't see any kind of solution to the problem because it seems that as soon as anyone buys a house here, they immediately become vicious defenders of these NIMBy laws. Thus the topic of new home building becomes a sort of third rail issue for local politicians. Thus therein lies the reason why home prices in the Bay Area will probably remain out of reach.


One aspect of upward mobility not addressed by Kotkin is the eclipse of neighborhood filtering by NIMBYism, open space preservation, downzoning, intervention in markets by land trusts, and stealth municipal obstructionism to stop any development on land that potentially serves as a view amenity for surrounding properties. Without the ability of being able to move up on the housing escalator there is not much mobility.

Sure, in Southern California you can move out to the exurbs and buy a cheaper house. But as we can plainly see now the houses out on the urban fringe are cheap because they are depressed and unlikely to gain any value/equity that provides an up escalator into the middle class; allows houses to serve as collateral for small business loans; provides equity for move-up housing.

The first concentric ring of older housing stock around most central business districts has been captured as landing zones for economic migrants so that they can work in nearby wholesale, hotel, and tourist districts without having to commute. As much as the migrant labor may be needed and California is generally blessed with immigrants who fit into the culture, the carving out of older neighborhoods for immigrants interrupts the neighborhood filtering process and real estate escalator.

Push-down/Pop-up is the phrase that is often used by appraisers. If you push out first time home buyers from older neighborhoods with truly affordable housing stock that is occupied by migrants, they will pop up out in the exurbs somewhere. So new home developers love the public policies that push first time homebuyers out to their subdivisions.

The only way to lure young buyers back to the city is building affordable housing via redevelopment or inclusionary housing. But this typically is not family housing situated in neighborhoods that are conducive to families. Formations of intact families (2-parents/children) in California has been flat since the early 1970's (adjusted for population growth). It is intact families, not one-parent families, that form a springboard into the middle class. But affordable housing has become synonymous with "one-parent family housing" (i.e., dependent family housing that typically requires subsidies for mortgage, child care, health care, etc.) .

So yes, we love our immigrants and the cheap labor pool they provide so that luxury businesses and industries (hotels, restaurants, museums, amusements, etc) can thrive, but there is always a trade off. That trade off is an eclipse of the middle class who are driven out of cities to the suburbs and exurbs. It is not coincidental that Kotkin cites Mayor Bloomberg calling New York "The Luxury City."

Looking just at cities and finding a thin middle class is myopic, methodologically unsound, and casts a blind eye to the systemic causes for this trend. To repeat: you can't just look at the "push down" or "push out" zone and ignore the "pop up" zone. There is a food chain to upward mobility into the middle class. That food chain - called a "market" - has been grossly interrupted and eviscerated.

An untested hypothesis is that Houston, Dallas, Austin, Raleigh-Durham, and Salt Lake City mentioned in the article as "inland cities" with burgeoning middle classes are also those with less restrictive zoning, less open space preservation, fewer land trusts, weaker eviction laws, code enforcement not designed to punitively force sales of homes to trigger a tax reassessments (City of L.A.), less redevelopment and affordable housing produced by redevelopment, etc. Borrowing from sociologist Max Weber's books "The City" and "The Protestant Ethic and the Spirit of Capitalism," it may be that social culture and religion cannot be discounted as factors either in the growth of "Bourgeouise" middle class families in certain cities.

Since the Roman Empire, elites have often formed a political coalition with the underclass against the middle class. Is it any surprise empirically that those cities with thin middles classes are mostly run by the party of government?

The case is beyond doubt, but the planners are in denial


Thank you for saying all that, you are so right. There is so much denial around on the connection between regulations and land prices, one wonders what is the agenda of the deniers.

Prof. Theo Eicher of Washington, has quite a list of academic papers on the subject here:


This list is actually far from exhaustive.

A recent Alain Bertaud paper thoroughly analyses China and India; the problems there are on a different level, but the same problems: regulations raising the barrier of what people can afford as a home:


In India, the results are reflected in "informal housing"; it is a wonder to me that "informal housing" has not ended up returning to seriously unaffordable Western cities like LA, London, Vancouver, and Sydney. The "AudaCity" organisation in England has been threatening to establish a settlement somewhere to draw attention to the problem. Young people in England COULD house themselves illegally on small plots of land legally bought from a farmer, and the land cost would be as little as 1% of what they have to pay usually (no wonder first home buyers average age is said to be 37 in England).

I strongly recommend every paper co-authored by Paul Cheshire of the London School of Economics since about 2000; most of them are co-authored by Stephen Sheppard.

These papers point out the results of 5 decades of "urban containment" regulations in Britain. The results of arbitrary restriction of TOTAL land supply (rather than arbitrary allocating a ration of square metres to individuals) is that land prices rise endlessly (with serious short term bubbles and crashes along the way); and INCOMES become a greater and greater determinant of the "share of land" everyone gets. The "inequality" effect of this is higher than the initial disparity of incomes. Higher income groups tend to monopolise efficient and convenient locations, as well as paying for larger lots than anyone else can afford. The result of this is that high population density and inefficient locations tend to go along together, which is the reverse of a normal free market in urban land.

The same applies to businesses locations; they are forced into less efficient locations where the land is "least unaffordable". The result is actually a serious LOSS of efficiency of urban form. Cheshire and colleagues estimate the NET welfare effect as equivalent to a 4% income TAX. So much for the idea that urban boundaries and forced consolidation will result in GAINS of efficiency. Cheshire and colleagues state that Britain's international economic competitiveness has been seriously eroded by their urban planning policies. They condemn "planners" who enact arbitrary boundaries, and have a nice mental picture of how they want everything to evolve within the boundary, yet have no concept of reality, and how land markets work, and even after 5 decades, are still in denial about it.

Meanwhile, Britain's "build rate" trends lower and lower; the "supply" response to each "bubble" is less and less, while prices inflate higher and higher each time. Old, substandard and unsanitary housing overcrowded with low income earners, becomes a worse and worse problem. The average floor space per person is the lowest in the OECD, below Japan; and this is the AVERAGE. The "inequality" effect referred to above means that serious overcrowding and squalor is occurring in the lowest income groups.

There is even an admitted shortage of "social housing" numbered in 7 figures; yet no politician has succeeded in breaking the impasses of "Green" urban myths to get this shortage addressed through building projects. The biggest Green urban myth is that Britain is "running out of land". Cheshire and colleagues point out that "Green belts" in Britain actually contain MORE land than the cities they surround.

"Green belts" and any arbitrary boundaries are appallingly destructive in their effects on land markets. Cheshire and numerous other authors have pointed out that preserving "enclaves" of natural and heritage areas is perfectly possible to do without setting off inflationary bubbles, as long as "freedom to develop" exists around and beyond the enclaves.