According to recent research, ethnoracial diversity negatively affects trust and social capital. This article challenges the current conception and measurement of "diversity" and invites scholars to rethink "so-cial capital" in complex societies. It reproduces the analysis of Putnam and shows that the association between diversity and self-reported trust is a compositional artifact attributable to residential sorting: non-whites report lower trust and are overrepresented in heterogeneous communities. The association between diversity and trust is better explained by differences between communities and their residents in terms of race/ethnicity, residential stability, and economic conditions; these classic indicators of inequality, not diversity, strongly and consistently predict self-reported trust. Diversity indexes also obscure the distinction between in-group and out-group contact. For whites, heterogeneity means more out-group neighbors; for nonwhites, heterogeneity means more in-group neighbors. Therefore, separate analyses were conducted by ethnoracial groups. Only for whites does living among out-group members--not in diverse communities per se--negatively predict trust.