This dissertation examines the role of adverse community environments in explaining individual-level adverse outcomes and social inequality. Specifically, it examines “How do adverse community environments contribute to the incidence of childhood adversity?” Through three related studies, this work contributes empirical evidence that can assist policymakers in designing more effective interventions to mitigate childhood adversity. Research, policy, and practice have emphasized changing parental behavior to minimize the effects of childhood adversity. However, critics of this parent behavior-focused approach claim these efforts contribute to a public narrative that centers family deficiencies as responsible for childhood adversity. This narrative oversimplifies toxic stress processes while obscuring broader social inequities that combine to overload families. This is especially important when understanding racial and economic disparities in rates of childhood adversity because poor, Black, Indigenous and Hispanic/Latino families are more likely to live in distressed communities. An alternative narrative is established through introducing the Community Adversity Index. This tool defines and quantifies community-level adversity and is used to demonstrate that community adversity is a strong predictor of family separation via foster care placement. Chapter 1 describes the three studies and concluding policy implications that form this dissertation. Chapter 2 establishes the theoretical support for a composite measure of community-level adversity and proposes data sources and indicators to calculate the index. The resulting single metric is then used to rank communities and describe how adversity is geographically distributed. Subindices are also used to determine how adversity is bundled or typically grouped in urban communities. Chapter 3 uses five criteria featuring statistical, validity, and sensitivity tests to establish the reliability of the index as a tool for directing policy efforts. Chapter 4 uses regression analysis to establish that measures of community adversity predict family separations. Findings suggest that reducing community-level adversity could reduce family separations in general, as well as for White, Black, and Hispanic/Latino populations specifically. The dissertation concludes with a final chapter summarizing how the index can be useful for influencing policy.