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November/ December 2013 The 2013 Opportunity Index

How well is your state helping you succeed?

By Anne Kim

The outcomes under the Opportunity Index approach, needless to say, are radically different from those of CNBC. Under the 2013 Opportunity Index, Texas—top ranked in opportunities for business by CNBC—ranks thirty-eighth in opportunities for people. Meanwhile, Vermont, which invests nearly double what Texas does per pupil in K-12 education ($15,096 versus $8,562), ranks first on the Opportunity Index and thirty-second by CNBC. On the other hand, some states, such as North Dakota, South Dakota, and Nebraska, manage to do right by both their businesses and their people. These three states rank in the top ten under both the Opportunity Index and CNBC, which means that creating opportunity for companies and creating it for individuals are not mutually exclusive propositions. Indeed, the best outcome of all is opportunity for individuals, broadly shared, along with robust economic growth and innovation.

The states that do best on the Opportunity Index are the states that have made investing in their people a top priority, with good schools and early childhood education, real efforts to help young people find jobs when they graduate or to keep them from dropping out, and a commitment to improving opportunity for all. Perhaps because of its investments in K-12 education, Vermont has the highest on-time high school graduation rate in the country, and more than 91 percent of its students leave school with a diploma.

Also significantly, the Opportunity Index highlights the increasing importance of geography and its impact on individual opportunity. For at least the past two decades, discussions around poverty and mobility have focused heavily on the role of choice and “personal responsibility.” The vast majority of Americans still believe that with enough hard work and ambition, almost anyone can attain the American Dream. But even if a person “chooses” to go to college to find a better job, that choice is meaningless if affordable colleges aren’t nearby, or if a person is unprepared to succeed because of substandard schooling. While people can overcome their personal circumstances, they might not be able to overcome the zip code of their birth.

As Erin Currier, director of the Pew Economic Mobility Project, says, “More and more evidence shows stark differences in mobility depending on geography. Place matters.” New research by Harvard researchers Raj Chetty and his colleagues, for example, shows that income mobility is higher in places with more two-parent households, better schools, and higher levels of civic engagement among residents. A 2013 study by the Center for America Progress found that people living in communities with a large middle class and less inequality are also more likely to have mobility.

Social capital, says Measure of America codirector Sarah Burd-Sharps, is the currency of upward mobility. Young people who grow up in places with strong civic ties and a sense of community are more likely to find mentors who will connect them to jobs and other opportunities. Moreover, in places with less inequality, social capital is more likely to be diffused within a broader group of people, rather than concentrated among an elite few. Think about it from personal experience, Burd-Sharps says. “Pretty much everyone who gets a job got it because they heard about it from a connection,” she says. In fact, she continues, the level of disconnection by young people in a community—that is, the share of young people who are neither in school nor working—is potentially the clearest signal that a community’s “infrastructure of opportunity” is either nonexistent or broken. (See Richard Florida, “The Living-in-the-Basement Generation.”)

While some structural differences—such as the level of church membership—are less susceptible to public policy, federal, state, and local policy choices can have profound impacts on whether people have access to the building blocks of upward mobility: decent schools, safe streets, and even access to grocery stores with affordable healthy food. In some neighborhoods of Houston, says a report by Children at Risk, “areas as large as 10 miles have been identified as containing a single food source—gas stations that sell tobacco, alcohol and fatty snacks.” As a tragic—but unsurprising—consequence, as many as 47 percent of Harris County children are obese or overweight.

In the same way that the rankings of the U.S. News & World Report have influenced—for better or for worse—the investments and choices that colleges have made to improve their standings, it’s likely that the multiplicity of business-focused rankings have skewed the policy choices of states eager to attract companies within their borders. Texas, for example, spends $19 billion a year on tax incentives to woo companies to the state, according to the New York Times—at the same time, it cut education spending by $5.4 billion last year. In the last legislative session, Texas lawmakers passed yet more tax cuts, exempting small businesses from franchise taxes, lowering franchise tax rates, and creating a special tax break for data centers doing business in the state. Texas was also among the first states to develop a so-called war chest—the Texas Enterprise Fund—aimed at offering companies incentives to move to the state, along with a smorgasbord of other goodies, including grants and low-cost loans to businesses.

The counterexample is the state of Iowa, which ranks sixth on the Opportunity Index. Shortly after the launch of the index, a group of local Iowa organizations, including the Des Moines Area Community College, United Way, AARP, Boys and Girls Clubs of Central Iowa, and others, launched Opportunity Iowa to improve the state’s Opportunity Score, as measured by the Opportunity Index. Among the results is the state’s Skilled Iowa Initiative, an effort launched in June 2012 to match job seekers with employers.

Opportunity Nation’s aspiration is for more states to follow Iowa’s example. By changing the conversation about what’s measured, the Opportunity Index could also change what matters to policymakers’ priorities. The result would be a stronger, fairer, and more prosperous America.

To read more from our November/December 2013 cover package on opportunity in America, click here.

Anne Kim is Editor of Republic 3.0.

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