The Equity Factor

7 Cities Where Poor Neighborhoods Bucked the Trend and Became Wealthier

More than 35 percent of Austin neighborhoods saw a 50-200 percent jump in income between 1980 and 2008. Credit: Emma Danielsson on Flickr

Since 1980, the nation’s poorest neighborhoods have remained mostly unchanged while high-income areas have seen robust growth. New research from the Federal Reserve Bank of Cleveland, exploring stagnant growth in pockets of concentrated poverty and why it persists, has found that two-thirds of neighborhoods in the poorest quartile in 1980 remained there in 2008. The rich? They stayed rich, too.

This is all rather self-evident. We’ve known for years that concentrated poverty often moves in a vicious cycle, and that everything from education to transit access stunts economic mobility. So I asked Kyle Fee, one of the authors of the Cleveland Fed report, if he could name any cities as good examples. Sure, pockets of poverty often beget more poverty. But there must be a larger trend. Why do some low-income neighborhoods see growth while others see very little?

Fee went back through his research and picked seven Metropolitan Statistical Areas (MSAs), the academic term for metro region, that saw large changes in low-income neighborhoods, as well as seven that saw low growth. As you can see in the chart Fee put together for us below — from left to right it shows neighborhoods that had no change, small change (zero to 50 percent in income growth) and large change (50 to 200 percent in income growth) — there are some familiar faces. Keep in mind that these are not the top and bottom seven, but rather cities Fee felt were indicative of a larger trend.

At the top, we have cities with very strong regional economies. The Bay Area obviously has serious problems with growing inequality, but you can’t dispute its stable — and rapidly blooming — regional economy. The same goes for the other six regions.

As for the bottom seven? A handful are cities often saddled with the “Rust Belt” and “post-industrial” label. There’s no denying that Austin, with 35.5 percent of low-income neighborhoods seeing a large change in household income, saw more growth than Buffalo, where only 14.9 percent of low-income neighborhoods had a strong uptick. So what gives?

“The ones that are growing are the ones that kind of typify high-growth MSAs,” Fee told me. “To me, they’re a little bit further ahead in the change over from the old economy to the new knowledge-based economy. Along with them being generally stable regional economies to begin with. They’re probably a little bit further ahead in the economic transformation.”

This seems to be a divide ruminated over and over again: How can legacy and post-industrial cities reshape their economies for the 21st century? While media coverage often centers on blue-collar and middle-class workers — from tool-and-die shops to vacant factories — these stagnant economies have a deep effect on poor neighborhoods, too. Buffalo, Cleveland, Detroit, Pittsburgh — all of these cities are trying to reinvent themselves on the fly. And the overall sagging economy has an exacerbated effect on low-income residents.

Fee was hesitant to offer policy prescriptions. While the data does show some harsh numbers about what we already thought, he didn’t want to make any blanket statements. But he did offer some broader analysis on how cities and metro regions might weigh economic development and growth strategies going forward.

“The walkaway from this is you have to think about supporting your larger economy if you’re going to try to lift up some of your lower-income areas,” he said. “You should be conscious of your larger metropolitan environment when you’re pushing policies directed at low-income neighborhoods.”

That may sound like the old trickle-down economy adage, but Fee is right. By focusing on the economy at large — instead of quick fixes and Band-Aids for poverty-stricken neighborhoods — there’s a better chance that you can, as lawmakers like to say ad nauseum, let the rising tide lift all boats.

The Equity Factor is made possible with the support of the Surdna Foundation.

Bill Bradley is based in Brooklyn. His writing has appeared in The Daily, Bloomberg Businessweek, GQ.com and Vanity Fair, among others. Follow him on Twitter @billbradley3.

Tags: equity factor, poverty, demographics, charts