In 1970, 65 percent of U.S. families lived in middle-income neighborhoods. By 2009 that number had dropped to 42 percent. A recent study from researchers at Cornell University and Stanford University says middle-income neighborhoods are disappearing as it's becoming more common for people to live in either extreme. The researchers use the term "income segregation," which "denotes the extent to which families of different incomes live in different neighborhoods."
From 1970-2009, the percentage of people living in the poorest neighborhoods increased from eight percent to 18 percent, and those living in the wealthiest neighborhoods increased from seven percent to 15 percent. Strikingly, the divide is much greater for black and Latino families. Increases in housing inequality appear to have spiked in 2000 and have continued to make a sharp upward climb, only recently leveling off in 2009.
This data follows similar reports that income inequality is growing nationwide, and is having a multitude of negative effects, including decreased life expectancy and education opportunities, and stifling the nation's economic growth. The dangers of income inequality are so extreme that economist Robert Shiller--who was among the three to win the Nobel Prize for economics and also predicted technology and housing market bubble bursts--says it's the most important challenge this country faces.