Key points:
- American cities are divided between prosperous and impoverished neighborhoods.
- Poverty is geographically and economically entrenched in today’s cities.
- Housing costs outpace economic opportunity, causing social and environmental damage.
More than a decade ago, Alan Mallach published The Divided City: Poverty and Prosperity in Urban America, a clear-eyed, deeply researched look at how American cities were being reshaped—not only by revival, but by growing inequality, stagnation, and spatial segregation. In 2025, the book reads not as a historical analysis but as a diagnosis of our present crisis.
Mallach’s central argument is that American cities—especially older industrial ones—have become sharply divided. Some neighborhoods, usually close to downtown, are being revitalized through investment, institutional growth, and an influx of young professionals. Others, often on the urban periphery or in inner-ring suburbs, are in steep decline, with shuttered schools, vacant homes, absentee landlords, and a fraying civic fabric. What he described over a decade ago has only deepened, especially in California.
One of the book’s most enduring insights is that poverty itself is not new—but the way it is geographically and economically entrenched today is new. Cities once served as ladders of upward mobility. Today, too many neighborhoods have become traps of intergenerational poverty, where the poor remain poor not because of lack of effort, but because the opportunity structures around them have collapsed. Where there were once jobs, transit, decent schools, and upward pathways, now there is isolation, disinvestment, and a punishing cost of survival.
The heart of the crisis is a profound misalignment between housing and economic opportunity. Mallach drives this point home repeatedly: there are places in the U.S. where housing is cheap—where you can buy a house for $30,000 or rent for under $800—but they are cheap because there is no opportunity there. The jobs are gone, and with them went the schools, the tax base, the grocery stores, and the sense of possibility. And the places where opportunity does exist? Housing is unaffordable, zoning is exclusionary, and demand has far outpaced supply.
Nowhere is this tension clearer than in California. We are a state of economic dynamism—home to the tech industry, world-class universities, global research hospitals, and a booming clean energy sector. But we are also home to the highest poverty rate in the nation when adjusted for housing costs. Rents have risen alongside incomes for the wealthy, while outpacing incomes for everyone else. And despite a strong labor market, we have a homelessness crisis that defies reason—because access to housing no longer follows access to work.
This divide doesn’t just trap people in poverty. It exhausts them. Across the state, millions of Californians are forced to commute hours each day because they cannot afford to live where they work. This takes a measurable toll—on health, family life, productivity, and civic engagement. It strains public infrastructure and deepens environmental damage. It leaves working people one flat tire or missed paycheck away from eviction. And it breaks the social compact that says if you work hard and play by the rules, you should be able to afford a place to live.
Mallach’s term for this is “the uncoupling of the economic city”—the idea that wealth is being generated in specific nodes (innovation districts, university-adjacent neighborhoods, gentrifying downtowns), but not shared beyond them. Economic growth is real, but spatially bounded. The poor are not lifted by the rising tide. In fact, the tide is washing them out of the places where opportunity now clusters.
This mismatch isn’t just economically inefficient—it’s morally corrosive. When we locate opportunity in places where only the affluent can afford to live, we reinforce a form of economic apartheid. And when public policy either ignores or tacitly accepts this arrangement, we’re not just tolerating inequality—we’re entrenching it.
Mallach is clear-eyed about how this happened. The decline of manufacturing didn’t just mean job losses—it meant the collapse of a local economy that once had civic rootedness. Unlike today’s footloose capital, the old “civic capitalism” of local entrepreneurs and industrialists had their fortunes tied to the city’s well-being. When they thrived, so did the workers and neighborhoods around them. Today’s economy, built around global capital, higher ed, and health care institutions, generates wealth—but often for a workforce that commutes from afar and spends its money elsewhere.
Meanwhile, the tools of housing production and development have done little to reverse these trends. Tax credit programs tend to concentrate affordable housing in already-distressed areas. Zoning and CEQA delays block housing in affluent communities. And well-intentioned urban redevelopment efforts often fail to alter the deeper dynamics of segregation and capital flight. Mallach’s example of the Sandtown-Winchester initiative in Baltimore—a $130 million investment that ultimately did little to alter the neighborhood’s trajectory—shows how hard it is to rebuild a place that people are still trying to leave.
The result is a vicious cycle. Neighborhoods that are affordable often become dumping grounds for absentee landlords, speculators, or predatory investors—what Mallach calls “milkers”—who extract rent while doing nothing to maintain the property or invest in the community. Over time, even the affordable housing becomes unlivable. And when that happens, the so-called affordability turns into a trap rather than a stepping stone.
At the same time, high-opportunity neighborhoods and cities like San Francisco, Palo Alto, or Davis block new housing, creating artificial scarcity and driving up prices. The people who clean the offices, care for the children, or serve the food are pushed farther and farther out. The housing-jobs imbalance becomes an engine of inequality.
So what can we do?
Mallach offers no silver bullets, but he outlines a set of priorities that still hold. First, we need to improve the quality of life in distressed neighborhoods—not just by building housing, but by investing in schools, transit, safety, and public health. Second, we need to connect people to opportunity by building housing near jobs, creating reliable transit networks, and breaking down exclusionary zoning barriers. Third, we need to give people options—including the option to leave distressed neighborhoods and move into areas with more opportunity, better schools, and safer streets.
That last point is key. It is not enough to “revitalize” distressed communities if the people who live there cannot benefit. Nor is it enough to talk about affordability in the abstract. We must talk about access—to jobs, to schools, to transit, to upward mobility. And that means rethinking land use, funding public housing, reforming tax credit programs, and prioritizing long-term planning over short-term returns.
Ultimately, Mallach’s message is that revival without inclusion is not success—it’s failure by another name. A city cannot thrive when prosperity is walled off from most of its residents. And a housing market that fails to house the people who keep it running is not a market—it’s a machine for deepening inequality.
The housing crisis is not just a crisis of supply. It’s a crisis of political will, institutional inertia, and systemic exclusion. If we want to build cities—and a state—that work for everyone, we have to realign housing with opportunity. Otherwise, we are not solving poverty. We are cementing it.
Alan Mallach saw all of this clearly more than a decade ago. That we are still grappling with the same questions—and often falling further behind—is not just a policy failure. It is a moral one. The longer we look away, the harder it becomes to fix. But the longer we wait, the more urgent the task becomes.
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Affordable Housing Alan Mallach California Housing Housing Crisis Poverty public housing San Francisco Sandtown-Winchester initiative The Divided City Wealth