I deleted a previous comment because I didn't accurately convey my thoughts, but I'm hoping this is more accurate.
My hometown is one of the cheapest, yet most uneducated and violent cities in all of California. There was a huge class divide amongst my peers, none of whom were rich; Some could afford to move elsewhere, and others couldn't. Of those that couldn't, I would say approximately 20-30% are in prison, and the rest are stuck in Of those who could move elsewhere (not rich, mind you, just well-to-do enough to move to a different city in CA, like say Sacramento or San Bernadino), most have decent middle class blue collar jobs (~$40k). About 10% of the group that was better off ended up going to college, and I would count myself amongst maybe 5 people (out of a class of ~400) that have truly jumped class barriers.
When you can only afford to live in one place, you are limited by the options of that one place. Even tiny increments in income/wealth open up exponentially greater opportunities, for the sole reason that they allow you to move elsewhere. For this reason, I concur 100% with Yglesias' theory: Housing regulation and laws, which have a disproportionate effect on housing affordability, are a huge impediment to class mobility.
Seattle, I hope you shape up before you turn into San Francisco. Thankfully, I can afford to live here, but my presence in Seattle is crowding out people that are exactly like me from 2-3 years ago. Accommodate them and build new housing, or you will cause their demise.